Another Great Benefit of a Strong Economy
Cuts to entitlement programs including Social Security and Medicare have been weighing heavy on the minds of soon-to-be retirees and current recipients of social aid for obvious reasons. The government’s reactionary policies have undoubtedly instilled fear in Millions of seniors who rely heavily on government aid, creating public outcry and political unrest. Good news isn’t well publicized in today’s media, but everyone can sleep a little easier this week after the release of unexpected positive economic data.
The federal budget deficit has been greater than $1 trillion every year since the recession ended four years ago. The Congressional Budget Office, however, has just presented wonderful news stating the deficit is on track to fall to just $642 billion by the end of the fiscal year, September 30th. This is a whopping $200 billion less than the projected forecast released three months ago!
This incredible decrease in the federal deficit is the result of increased tax payments from individuals and businesses, as well as higher payments from government owned mortgage finance companies Fannie May and Freddie Mac. It is not from the $85 billion in mandatory cuts (sequestration) or the tax increases the government passed to avoid the “Fiscal Cliff”. These factors have already been included in previous forecasts. In large, the economy is fixing itself.
The Congressional Budget Office has been painting a rosy picture. In addition to cutting the budget deficit forecast for this year, they have quietly erased over $600 billion from the cumulative 10 year budget deficit. This, in large part, is a reflection of smaller projected costs associated with entitlement programs including Social Security, Medicaid, and Medicare.
So what does this mean for Medicare? The United States Government, as wonderful as it is, has a bad habit of addressing pain points in a reactionary manner rather than proactively addressing issues that may arise. Medicare and other entitlement programs have been at risk mostly because the federal deficit has been an extreme pain point over the past four years. With the deficit no longer a concern, cuts to Medicare and Social Security are almost completely off the table. Furthermore, growth in healthcare costs has slowed, alleviating pressure on lawmakers to cut benefits.
We aren’t out of the woods yet. Just as a strong economy benefits entitlement programs, a weak economy can be disastrous. If the government continues to address pain points in a reactionary manner rather than solve issues before they become a problem, Medicare will be at risk once again when, not if, the economy slumps.