Answer to Question #3687 in Other Economics for Natalie
Why is it so politically difficult to make real cuts to Medicare and Social Security?
Medicare was created when President Lyndon B. Johnson signed amendments to the Social Security Act on July 30, 1965. According to statistics, 44 million people were enrolled in Medicare in 2009, 37 million of whom are 65 and older. This program costs about $432 billion annually, which is almost 5% of GDP. Obviously, it gets harder and harder to maintain the same level of government spending on social and medical protection each year with national debt increasing dramatically. It may seem that cutting such a great share of annual budget expenses is a good idea, but it is not. Around 12% of the U.S. population is aged over 65. Simultaneously, the population aged 35-44 shows a decline, because the smaller generation going into that age group is not replacing those baby boomers moving up into the older group. Projecting that ahead for the next three decades, the baby boomers will move into the 65-74 age group between 2010 and 2020, and into the 75-plus group between 2020 and 2030. During that period we need to be concerned about rising health care and social security costs. At the same time there will be fewer people in the high-income age group to provide for those costs. This is the situation in the U.S. for the next 20 or 30 years, and it is causing a lot of concern.& Especially, taking into consideration that population growth rate in 2011 was only 1.93%. The decrease in the rate of growth is predominantly due to the aging of the population and, consequently, a dramatic increase in the number of deaths. Social security is a key point in almost every political program. First of all, social protection is important aspect of macroeconomic policy and it simply can’t be ignored. Secondly, a human is a reluctant creature by nature, so big part of population wants to receive some kind of help from authorities. That is why many politicians manipulate social security allowances in order to grant themselves a larger share of votes. Thirdly, the absence of social security can trigger crime rate in no time.