Congress missed a chance to pick “low hanging fruit” in Social Security and other entitlement programs as part of a fiscal overhaul, according to Steven C. Wieting, Citigroup Inc.’s managing director of economic and market analysis.
The CHART OF THE DAY shows demographic shifts may hamper future efforts to rein in budget deficits through entitlement changes, as Wieting wrote in a report yesterday.
Growth in the number of Americans ages 65 to 74 is due to peak this year and slow for most of the next quarter-century, according to estimates by the Census Bureau. Within a decade, the 75-and-up age bracket will increase at a faster pace.
“A package of measures to alter the course of underlying health-care demand and supply seems greatly needed” to address the issue, Wieting wrote. The New York-based economist added that any agreement “seems far more complex and difficult to achieve politically” than averting a so-called fiscal cliff.
At the moment, the formula for calculating Social Security cost-of-living adjustments and the age of eligibility for the Medicare program are obvious targets for budget negotiators, the report said.
Republicans in Congress may pursue changes in these provisions and others in return for an increase in the U.S. debt ceiling of $16.4 trillion. The limit has to be raised as early as mid-February to prevent a default on Treasury debt.