Medicare's Popularity Defies Need to Cut Spending

When President Obama joined Democratic senators Wednesday, one senator, worried about the nation's debt of $12 trillion and climbing, said he told his kids they'd have to pay for it.

"My daughter, Caroline, who's 10, was there and she walked out with me at the end and she said, 'Just so you know, I'm not paying that back,'" said Sen. Michael Bennet of Colorado, drawing laughter.

In fact, she'll have no choice and it's even worse upon closer inspection. One program, Medicare, has unfunded liabilities that dwarf the $12 trillion in current debt.

"Medicare is a much more challenging situation than Social Security," said David Walker, president and chief executive of The Peter G. Peterson Foundation and former comptroller general and chief auditor of the federal government. "Medicare was underfunded $38 trillion as of last year and growing."

James Capretta, a fellow at the Ethics and Public Policy Center and a top budget official in the Bush administration, said that the number of Americans 65 and over is expected to grow from 41 million to about 71 million.

So 30 million more people are going into a program that Uncle Sam cannot pay for. And Medicare and other entitlements are beginning to overwhelm the rest of government.

Obama pointed to that very dilemma, explaining the nation can't get close to balancing the budget if entitlements are off the table.

"You'd have to cut non-discretionary defense spending by 60 percent -- cut it by 60 percent. That's everything -- student loans, NASA, veterans programs -- you name it, we'd have to cut by 60 percent."

The president also said one of the problems with trimming entitlement programs is that people like them. That's why lawmakers keep mandating cuts in Medicare -- like reducing fees for doctors who treat Medicare patients -- then back down the moment seniors complain.

The House killed those cuts in doctor fees last fall but simply added the $220 billion dollar cost to the deficit.

The recent health care reform bills also called for cutting spending in Medicare by some $500 billion. But that money wasn't dedicated to make Medicare stronger but rather to pay for other things -- including a new entitlement -- permanent subsidies for health insurance.

"If you take those Medicare cuts and apply them to creating a new entitlement before you fix Medicare, how are we going to fix Medicare program?" said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

"There are basically no ideas left," she said.