For all the political drama they are generating, the cuts only mask the long-term budget problems: The Social Security disability trust fund is projected to exhaust its reserves by 2016. The Medicare fund that pays hospital bills will burn through its reserves by 2024.
Cuts Roll In as Time Runs Out
No Last-Minute Deal; Spending Reductions Won’t Touch Deficit’s Biggest Drivers
By Damian Paletta, Janet Hook, Wall Street Journal (02/28/2013)— The federal government enters a controversial new phase of deficit cutting Friday, as an automatic trigger begins slicing budgets in some areas while leaving programs such as Medicare and Medicaid—among the largest drivers of future debt—largely untouched.
The $85 billion in so-called sequester cuts push Washington, and the nation’s economy, into uncertain waters. The debate over the across-the-board reductions has added to the already-high level of acrimony between Democrats and Republicans on fiscal matters, lowered even further the public’s estimation of the capital’s leaders and raised consumer fears about the economy, according to polls.
In the eyes of many budget experts, though, it is doing something worse: By focusing on a proportionally small level of spending, the sequester fight is distracting attention from longer-term deficit issues that need to be addressed.
Even cuts that have some bipartisan support, such as limiting the growth of future Social Security benefits or ending farm subsidies, have been shelved amid the brinkmanship.
“If they could get this fixed, the economy is poised to take off,” Bank of America Corp. Chief Executive Brian Moynihan said… [MORE]