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Press Release

Gov't Report Shows Entitlement Crisis Continues to Worsen, Threatens Taxpayers, Citizen Group Warns

For Immediate Release April 24, 2007
Pete Sepp, (703) 683-5700

(Alexandria, VA) -- Government data released late yesterday details how Washington is running out of chances to address trillions of dollars in federal liabilities, according to the 362,000- member National Taxpayers Union (NTU). The Trustees of Social Security and Medicare predicted that Medicare Part A will exhaust its trust fund in 2019, and Social Security will be insolvent by 2041.

"This year's report presents an immediate challenge to Congress and the Administration," said NTU President John Berthoud. "This was the second consecutive 'Funding Warning' issued by the Trustees, which means that the President's FY 2009 budget will finally have to confront America's now plainly evident entitlement crisis."

Since 1992, the Trustees report has provided one bleak fiscal picture after another. In 1992, the Trustees noted that the pending retirement of America's "baby-boom" generation would precipitate the eventual fiscal demise of Social Security. They wrote, "? tax rates scheduled in the present law are expected to be insufficient to cover program expenditures." Instead of heeding these warnings about long term debt, however, Washington has continued to pile on new federal mandates like the Medicare Prescription Drug benefit.

An expert in federal finance, Berthoud noted that restoring balance to Medicare alone will require either an immediate 122 percent tax increase or a 51 percent reduction in benefits, both of which are politically infeasible. "Though the White House and Congress are controlled by different parties, Democrats and Republicans must start to grapple with the largest federal deficit threat this nation has seen. Balancing the budget and providing market-based reforms to curtail government debt are keys to turning this menace into a meaningful victory for taxpayers," Berthoud noted.

Berthoud also observed that these entitlement shortfalls will occur much sooner than many believe. In the next nine years, federal Disability and Hospital Insurance will run a combined deficit of $141 billion, up more than $18 billion from last year's projection. Just a few of the many NTU-backed initiatives for change include modestly restraining the growth of future benefits, preventing a cost explosion in the Medicare Part D prescription drug program, and helping Americans save more for their own retirement.

"Politicians of all stripes who claim to care about restoring fiscal responsibility to Washington had best begin serious legislative efforts now," Berthoud concluded. "With part of our entitlement system running deficits as early as 2011, the well-being of current as well as future taxpayers hangs in the balance."

NTU is a non-profit, non-partisan organization working for lower taxes and smaller government. Note: More information on entitlements, along with recommendations for budget process reform and spending reductions, may be accessed online at