The following HTML text is provided to enhance online
readability. Many aspects of typography translate only awkwardly to HTML.
Please use the page image
as the authoritative form to ensure accuracy.
Choosing the Nation’s Fiscal Future
information, fiscal targets, incentives for prudent action, and procedures to enhance accountability could make a difference. The reforms and options outlined in this chapter could help.
1. Trust funds, such as Medicare Part A (hospital insurance), become a net fiscal drain on the budget when they are contributing less cash from dedicated taxes than they are spending, which is often long before their fund runs out of Treasury securities that enable them to pay benefits in full. Even though the fund may be technically solvent, the budget incurs a net financial burden as fund-held Treasury securities are redeemed to cover cash deficits.
2. If the trigger concept is extended to tax expenditures, there would be particular challenges, including the several years’ lag before data on revenue losses become available and the large number of exogenous factors that affect tax expenditure revenue losses, including changes in tax rates and other tax expenditures.
3. This softer trigger, which requires expedited consideration of Medicare reforms, has been ignored or bypassed by the House in both years that such a review was triggered. Currently, the Medicare program has a trigger that is activated when the general revenues that support the program exceed 45 percent of the total program. Because the trigger was activated for fiscal 2009, the President included in his budget proposals to bring Medicare below the threshold, but Congress took no action in response.