RE: Request for Projected Debt Levels under Plans

[Reed Davis <rdavis2@ix.netcom.com>]

Representative Charlie Stenholm wrote:
>
> I obviously completely agree with your point. Unfortunately, we do not have
> specific estimates of the impact of the Kolbe-Stenholm plan on the national
> debt. We have asked the Social Security Administration and Congressional
> Budget Office analyze the impact of our plan on the national debt, national
> savings and future tax liabilities. I will post any response from CBO or
> SSA on this bill if I recieve it while this forum is still going on.
>
Thank you very much for your response.  If the numbers do become available
while this forum is going on, I'd be very interested in seeing them.  Perhaps
you can post them on the Web if they become available later.
>
> Both the Clinton plan and the Archer-Shaw plan create new general
> revenue obligations on top of the existing requirements, which CBO and the
> SSA actuaries have found will create higher debt.
>
That's one of the things I found most distressing about the two plans.
We face a problem in financing the current level of benefits.  So what do
the two plans do but go and create new benefits.  I can't help but suspect
that the chief purpose of the new benefits to gain support for the plans.
I have to complement your plan for not giving in to this temptation.
>
> It is perfectly legitimate to use additional general revenues to fund
> the current level of benefits but we should realize that the consequences
> of doing so will be higher debt.
>
I'm not sure that I completely agree with this.  I think that a generation
has the right to increase the safety-net that they're supporting.  But I
don't think that they have the right to commit the next generation to
undertake a higher level of taxation in order to support what they define
to be "the current level of benefits".  In addition, I was hoping that
Social Security could retain the discipline of paying for itself with
dedicated funds.  That would put us in a better position to deal with
Medicare which could prove to be a much greater problem.  The 1999 Trustees
Report projects that HI (Medicare, Part A) will exhaust its fund by 2015.
>From 1999 to 2073, they project that HI and SMI (Medicare, Part B) outgo
as a precent of GDP will grow 96% and 170%, respectively.  This compares
to 59% and 53% for OAS (Old-Age and Survivors Insurance) and DI (Disability
Insurance), respectively.  Following are the actual figures taken from
"Status of the Social Security and Medicare Programs, A Summary of the 1999
Annual Reports".

  OASI, DI, HI AND SMI OUTGO AS A PERCENTAGE
          OF GROSS DOMESTIC PRODUCT
---------------------------------------------
  Trust
  Fund     1999  2025  2050  2073  % Increase
---------- ----  ----  ----  ----  ----------
OASI       3.86  5.56  5.85  6.12  59
DI         0.60  0.93  0.94  0.92  53
HI         1.56  2.20  2.80  3.06  96
SMI        0.98  2.23  2.46  2.65  170

Reed Davis