U.S. COMPTROLLER: PRESCRIPTION DRUG BILL 'MAY BE THE MOST FINANCIALLY IRRESPONSIBLE LAW IN 40 YEARS'; Bill Will Add $8 Trillion to Long-Term Medicare Obligations
Thu Mar 1 2007 13:41:11 ET
That Could Already Bankrupt the U.S.
The U.S. government's top accountant says the law that added a prescription drug benefit to Medicare may be the most financially irresponsible legislation passed since the 1960s. U.S. Comptroller General David Walker says Medicare -- barring vast reform to the program and the nation's healthcare system -- is already on course to possibly bankrupt the treasury and adding the prescription bill just makes the situation worse. Walker appears in a Steve Kroft report to be broadcast on 60 MINUTES Sunday, March 4 (7:00-8:00 PM, ET/PT) on the CBS Television Network.
"The prescription drug bill is probably the most fiscally irresponsible piece of legislation since the 1960s," says Walker, "because we promise way more than we can afford to keep." He argues that the federal government would need to have $8 trillion today, invested at treasury rates, to cover the gap between what the program is expected to take in and what it is expected to cost over the next 75 years Ã and that is in addition to more than $20 trillion that will be needed to pay for other parts of Medicare. "We can't afford to keep the promises we've already made, much less to be piling on top of them," he tells Kroft.
The problem is the baby boomers. The 78 million people born between 1946 and 1964 start becoming eligible for Social Security benefits next year. "They'll be eligible for Medicare just three years later and when those boomers start retiring en masse, then that will be a tsunami of spending that could swamp our ship of state if we don't get serious," says Walker.
As life expectancies increase and the cost of health care continues to rise at twice the rate of inflation, radical reform in health care will be necessary, Walker says. He says the federal government is also going to have to find ways to increase revenue and reduce benefits. The alternative is ugly. Walker shows Kroft General Accounting Office long-term projections that assume the status quo continues, with the same levels of taxation, spending, and economic growth. By the year 2040, Walker says, "If nothing changes, the federal government is not going to be able to do much more than pay interest on the mounting debt and some entitlement benefits. It won't have money left for anything else...."
Sen, Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, tells Kroft that this problem is well known among members of Congress: "Yes, they know in large measure, Republicans and Democrats, that we are on a course that doesn't add up." And he acknowledges nobody is addressing the matter. Why? "Because it's always easier not to," Conrad says, "because it's always easier to defer, to kick the can down the road to avoid making choicesÃ‰You get in trouble in politics when you make choices."
Walker believes the biggest problem may be that everything seems okay now, so people don't have the sense of urgency that's needed to make tough choices. But the longer we wait, he argues, the harder it's going to be to solve the problem. "The fact is that we don't face an immediate crisis and so people say, Ã”What's the problem?' The answer is, we suffer from a fiscal cancer...and if we do not treat it, it could have catastrophic consequences for our country," he tells Kroft.