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Entitlement Reform
According to the most recent annual report issued by the Social Security and Medicare Boards of Trustees, the unfunded liabilities of these two programs over the next 75 years total approximately $32 trillion.  Demographic changes, as well as rising health care costs in the case of Medicare, are driving these shortfalls.  Both Social Security and the hospital insurance component of Medicare are financed on a pay-as-you-go basis, meaning that current retiree benefits are paid by the taxes of current workers. 

As the Baby Boomers approach retirement and life expectancy continues to increase, this system is becoming increasingly unsustainable.  According to the trustees' report, the Medicare trust fund is projected to run out of money in 2019, and the Social Security trust fund will follow in 2041.  In order to fully fund the obligations of Medicare alone, we would need to raise the Medicare payroll tax from 2.9% to 13.4%, a tax increase that would have a devastating effect on job creation and economic growth. 

Solving these challenges will not be easy or painless, but it is essential if we want to preserve these safety net programs for future generations.  With each year that passes without action, the problem becomes larger and more difficult to confront.  In early 2006, Congress passed the Deficit Reduction Act, which made a number of changes to Medicare, Medicaid, and other programs to save approximately $40 billion over the next five years.  Unfortunately, the budget recently approved by the new majority in Congress makes no effort whatsoever to address the crisis facing Social Security and Medicare.  I believe this kind of inaction, while it may be politically advantageous, is deeply irresponsible.

Ultimately, I believe Congress will need to restructure both Social Security and Medicare to replace the current pay-as-you-go system with one that provides ways for younger workers to invest and save money for their own future retirement and health care expenses.  Pre-funding benefits in this way would take advantage of better rates of return available from prudent investments in equity and bond markets.  Additionally, I believe Congress may need to consider creating higher premiums and cost-sharing for wealthier Medicare beneficiaries, along with other reforms that would slow the growth of health care costs across the board.

While all of these changes will involve difficult choices, I believe Congress must commit to protecting these programs for future generations.  Sure, it would be easier just to ignore the problem.  But that's not the responsible option.  In fact, delay just makes any solution more difficult and costly, translating into higher taxes and/or benefit cuts.  We simply cannot afford to do nothing.  As a member of the House Committee on Ways and Means, which has jurisdiction over Social Security and Medicare, this will continue to be one of my highest priorities in Congress.