After the release of this week’s yearly report on the 75-year financial prediction for Social Security, a 25-year outlook report was also published by the Congressional Budget Office which assessed Medicaid, Medicare and expenditure under the Affordable Care Act. The report stated that the nation has a high number of older Americans
According to CBO, old age is the primary reason of long term spending. In fact, it takes up 55 percent of the predicted growth in federal expenditure for Social Security as well as the key medical programs as part of GDP till 2039.
American citizens being considered hindrance to growth
Putting it boldly, it simply means that if the longevity had not increased, there would not be such a huge constriction in the federal budget. Virginia Reno, Vice-President at National Academy of Social Insurance, feels that the CBO report’s conclusion is quite strange. She is surprised with the report stating the citizens of the United States as a problem. She further added that it would be more useful for the analytical department of the Congress to rather put its energies into offering suggestions as to how this issue can be successfully addressed.
On the contrary, CBO is twisting its hands over the issue that citizens above the age of 65 years would constitute a larger share of the population. This is likely to increase from the 14 percent to 21 percent by the year 2039.
CBO analysis lacks depth, says Virginia Reno
The sad news is that by deciding to undertake an analysis extending only to 2039, a significant piece of story has been conveniently disregarded by the CBO. It is indeed a fact that over a period of next 25 years, there will be an increase in Social Security payments, which would constitute 6 percent rather than 5 percent of the GDP. However, when considered from the point of view of the overall economy of the nation, it is a very minor change.
Also, there is no further increase predicted for the near future. Even post the death of the last baby boomer, the retirement privileges for the oldest people straighten out to 6.1- 6.2 percent of the GDP for the coming fifty years. This is primarily owing to the prediction that there will be a continued increase in life expectancy.