March 19,2013

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Hatch Says Entitlement Reform Not An Option, A Necessity

In Speech On The Senate Floor, Utah Senator Says, “Entitlement Reform Is Not An Option, It’s A Necessity. It Is Not A Matter Of Politics; It Is A Matter Of Math. America’s Social Safety Net Is Coming Apart At The Seams. And, If These Programs Are Going To Be There For Future Generations, They Need Serious, Structural Reforms.”

WASHINGTON – In a speech on the Senate floor today, Senate Finance Committee Ranking Member Orrin Hatch (R-Utah), blasted the Senate Democrats’ blueprint budget for fiscal year (FY) 2014 for failing to address the nation’s unsustainable entitlement programs. Over the next decade, the federal government will spend a combined total of $22.4 trillion on the Medicare, Medicaid, and Social Security programs. These programs are the greatest drivers of the nation’s near $17 trillion debt.

“Entitlement reform is not an option, it’s a necessity.  It is not a matter of politics; it is a matter of math.  America’s social safety net is coming apart at the seams.  And, if these programs are going to be there for future generations, they need serious, structural reforms,” said Hatch.   This isn’t new information.  It isn’t privileged or classified.  Anyone paying attention to our nation’s fiscal situation is aware that these challenges exist. So, what do the authors of the Senate budget propose we do about it? The answer, unfortunately, is: Nothing.”

In a letter last week, Hatch urged President Obama to work with Congress to find bipartisan solutions to reform the nation’s entitlement and outlined five bipartisan structural reforms to the Medicare and Medicaid programs that he put forward earlier this year.

Below is the text of Hatch’s full speech delivered on the Senate floor today:

Mr. President, our national debt currently stands at nearly $17 trillion. It’s difficult to believe that it’s reached that level.

What’s more difficult to believe is that there is anyone in this country who can look at that number and not feel a sense of urgency to address our nation’s spending and debt problems.
Yet, as we begin to debate the first Senate budget resolution in over four years, it seems that there are many in this very chamber that seem to think that the size of our debt is no big deal.  
If you take a good look at the budget we’re debating this week, there is really no other conclusion to draw.

The raw, overall numbers make a pretty convincing case that the authors of this budget see no real need to change course when it comes to our debt.

The budget before us maintains our current unsustainable spending and debt trajectory.  
It doesn’t balance, not at any point.  Its goal is to grow government, not jobs and the economy.
Under this budget, the national debt would increase by more than $7 trillion over the ten-year window.  In 2023, the debt would be over $24 trillion and rising rapidly.  

How can anyone bring a budget like this to the floor – one that massively increases our debt without even a faint attempt to reach balance at any point – and claim to be fiscally responsible?

But, that’s not all.  I haven’t even gotten to the worst part yet.

True enough, this budget would do some pretty irresponsible things.  But, the real story is what this budget doesn’t do.  

Everyone knows that the main drivers of our national debt are our entitlement programs – Medicare, Medicaid, and Social Security.  That fact has been confirmed by the Congressional Budget Office, the programs’ boards of trustees, and every serious economist or analyst that has spent longer than five minutes looking over our nation’s finances.  

Over the next ten years, we will spend $6.8 trillion on Medicare, $4.4 trillion on Medicaid, and $11.2 trillion on Social Security, for a combined total of $22.4 trillion.

That’s trillion, with a T.  

Medicare by itself is extremely problematic.  While the percentage of workers paying into Medicare has been on decline for over a decade, 10,000 seniors join the program every day.
According to the budget we’re debating this week, Medicare will account for $504 billion this year alone.  That comes out to about $1.4 billion a day.  

Over the next ten years, Medicare spending will increase by over 70 percent according to the Medicare Payment Advisory Commission’s most recent report.  By the end of that time, we’ll be spending more every year on Medicare than on our entire national defense.
Even President Obama – who has generally been reticent to consider real changes to Medicare – has admitted that, absent reform, the program will be bankrupt in 10 years.

The story is not any better with Medicaid.

In 2013, once again, according to the very budget we’re debating, federal spending on Medicaid will account for about $265 billion—and if you include what states are spending on Medicaid that’s $450 billion.  That’s $1.2 billion a day for just this one program.

Over the next ten years, federal Medicaid spending as a share of the U.S. economy is set to grow by 37 percent, according to OMB.  And, by 2020, 84 million people – nearly one out of every four Americans – will be dependent on Medicaid.

With Social Security, we have a program facing more than $20 trillion in unfunded liabilities over the long-term.

In the short-term, the Disability Insurance Trust Fund within Social Security is projected to be exhausted by 2016.  That means that, in about three years, Disability Insurance benefits will, by law, have to be cut by 21 percent.

All combined Social Security Trust Funds will be exhausted by 2033, at which time all Social Security benefits will have to be cut by 25 percent.  

So, Mr. President, it isn’t just that we’re spending a lot of money on these programs.  It’s that these programs are structurally unsustainable.  

That is why the Director of the nonpartisan Congressional Budget Office has referred to our health care entitlements as our “fundamental fiscal challenge.”

It’s why the Social Security Board of Trustees – which includes a number of high-ranking officials in the Obama Administration – has said that, with regard to Social Security, “legislative action is needed as soon as possible.”  

Entitlement reform is not an option, Mr. President, it’s a necessity.  It is not a matter of politics; it is a matter of math.  

America’s social safety net is coming apart at the seams.  And, if these programs are going to be there for future generations, they need serious, structural reforms.  

This isn’t new information.  It isn’t privileged or classified.  Anyone paying attention to our nation’s fiscal situation is aware that these challenges exist.

So, what do the authors of the Senate budget propose we do about it?

The answer, unfortunately, is: Nothing.

If you look at this chart, you’ll see that, as I stated, we’re projected to spend a total of $22.4 trillion on Medicare, Medicaid, and Social Security over the next ten years.  That is the red bar on the chart.

All told, the Democrats’ budget would reduce Medicare spending by $46 billion and spending on Medicaid by $10 billion.  It would make no changes whatsoever to Social Security.  

Adding those numbers together, the Democrats would reduce entitlement spending by only $56 billion over the next ten years, or by 0.2 percent.  That is the yellow bar on the chart.

You heard that right, Mr. President.  The budget resolution before us would reduce entitlement spending by two tenths of one percent over the ten-year budget window.  

Now, if you look at this next chart, you can see the path of entitlement spending over the next ten years in blue – that is, Medicare, Medicaid, and Social Security spending all combined, with no changes to our budget.  

The Murray budget spending path for entitlements is in red.  

See the difference?  

The answer, of course, is that you cannot.  

Put simply, this budget ignores our unsustainable entitlement spending and allows it to continue on a path that will bankrupt these programs.  

The Democratic majority has opted to continue to look the other way as our entitlement programs collapse under their own weight.
This, Mr. President, is simply irresponsible and is an insult to middle class Americans who rely on these programs and want to see them protected.

In January 2009, President Obama, when speaking on entitlements, said: “…what we have done is kick this can down the road.  We’re now at the end of the road, and we’re not in a position to kick it even further.”      

With this budget, the Democrats are refusing to even acknowledge that there’s even a can that needs to be kicked.  The budget doesn’t even pay lip service to the need for reforms of our entitlement spending.  It ignores the problem entirely.

Indeed, if you read the documents accompanying this resolution, you’ll find nothing even suggesting that there are any problems with these programs.  

Instead, you’ll find a multitude of statements accusing Republicans of wanting to “weaken” Social Security, “dismantle Medicare,” or make “draconian cuts to Medicaid.” There’s a lot of talk about keeping promises, but literally no mention of how these promises can or will be paid for.
And, there’s no recognition that this budget sets in place benefit cuts of over 20 percent for disabled American workers in a few short years, while watching other threads of the social safety net fray as trust funds become exhausted.  

Anyone supporting this budget will be sending a clear message to younger generations of Americans, which is that they don’t care whether the safety net will be there for them.   

This budget is further evidence of what has become a key difference between Republicans and Democrats.

Over the last few years, Republicans have united around the principle of entitlement reform.  We’ve put forward plans that make tough – and sometimes politically difficult – decisions in order to preserve programs like Medicare, Medicaid, and Social Security for future generations.  
Republicans haven’t chosen this path out of political convenience.  This is simply what the reality of our fiscal situation demands.  

Rather than acknowledging this same reality, Democrats have opted to attack and vilify any Republican who even suggests that changes to these programs are necessary.

They’ve continued the same talking points of the past, claiming that all of our nation’s fiscal problems can be solved simply by asking the so-called rich to pay a little more in taxes.  All the while, according to Democrats, there do not need to be any substantive changes to entitlements.  
They’ve pursued this course even as our debts continue to mount along with the evidence that suggests their approach simply isn’t working.  

The budget we’re debating this week is proof, not only that the Democrats are more interested in politics than solutions, but also that their policies simply won’t work in the real world.  

This budget would do all the things Democrats have said they want to do to grow the government.  

It would raise taxes by as much as $1.5 trillion.  And, once again, it would leave Medicare, Medicaid, and Social Security just as they are.  

Yet, in the end, this budget never balances.  

Under this budget, our nation’s debt would continue to grow, making it more difficult to respond to real crises or emergencies in the future.  In the end, our entitlement programs would continue on their path to bankruptcy, and we would end up with an even bigger government that we cannot pay for.  

The Washington Post editorial page, not typically known for being overly critical of the Democrat’s policies, assessed this budget, saying: “Partisan in tone and complacent in substance, [the budget] scores points against the Republicans and reassures the party’s liberal base — but deepens these senators’ commitment to an unsustainable policy agenda.”

The editorial concluded by saying that this budget “gives voters no reason to believe that Democrats have a viable plan for — or even a responsible public assessment of — the country’s long-term fiscal predicament.”

I couldn’t have said it better myself.

Mr. President, the American people have waited for over four years for the Senate Democrats to produce a budget.  And, after all that time, we now finally have on paper their blueprint for America’s future.  

Unfortunately for the American people, this blueprint does not address our nation’s most pressing fiscal challenges.  Instead, it would continue an unsustainable status quo in terms of both policy and politics.

This budget will not grow the economy and jobs; it will grow the federal government.

This budget will never attain balance; it just taxes more and spends more.

This budget will not reduce our debt; it buries the middle class even further in debt.

This budget will not preserve the safety net for future generations; it allows entitlement programs to perish.

That being the case, I urge my colleagues on both sides of the aisle to reject this budget and demand a more responsible plan for our country.  I yield the floor.