About the Speech
In 2005, Medicare required transfers from the federal budget in addition to its dedicated revenues equal to 8.6 percent of federal income tax revenues. This transfer will grow rapidly as the baby boomers become eligible for benefits beginning in 2009, so that in just 15 years, 2020, more than one-fourth of all federal income tax revenues will have to be transferred to Medicare, and by 2030, the transfer will require almost forty percent of federal income tax revenues.
These significant transfers imply a considerable unfunded liability that Medicare will impose on future generations, if changes are not made. The size of this liability is staggering. According to the 2005 Trustees Report, the unfunded Medicare promises total $68.3 trillion.
To put this in perspective, the present value of all future federal income tax revenues from now to eternity is $99.3 trillion. Thus, the Medicare debt of $68.3 trillion is 70 percent of all future federal income tax receipts. If Congress passed legislation today, binding on all future Congresses, setting aside 70 percent of all federal income tax revenues from now to eternity, we could just pay for promised Medicare benefits. The question is not whether current Medicare will continue, but how will it change.