The trustees of the Social Security and Medicare systems have issued a new report on the financial health of their respective “trust funds.” As one should expect, the news is not good.
The Committee for a Responsible Federal Budget summarized both reports.
While the day when the funds can no longer pay the benefits promised has been pushed back a bit, the bottom line remains the same: both of these major entitlement programs are heading toward insolvency.
Regarding Social Security, the Committee notes:
Social Security is approaching insolvency. Under current law, Social Security cannot guarantee full benefits to current retirees. The Trustees project the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033, when today's 58-year-olds reach the full retirement age and today's youngest retirees turn 71. Upon insolvency, all beneficiaries will face a 21 percent across-the-board benefit cut. Including the Disability Insurance (SSDI) trust fund, the theoretically combined trust funds will be insolvent by 2035 and beneficiaries would face a 17 percent cut.
How nice. As for Medicare and its associated programs:
The Medicare Hospital Insurance (HI) trust fund finances inpatient hospital care under Medicare Part A, paid for primarily from the Medicare payroll tax. The trust fund currently holds over $200 billion in reserves, and its trust fund is growing as it is projected to run modest surpluses through 2028. As the population continues to age and health care costs grow, however, costs are slated to rise and ultimately draw down the program's trust fund reserves.
HI deficits are projected to grow rapidly in the 2030s, depleting the HI trust fund by 2036. At that point, the law requires an immediate 11 percent cut in payments. These cuts would likely lead to significant disruptions in health care services for older individuals and those with disabilities.
Neat. What do the presidential nominees of major political parties intend to do about any of this? Just about what one would expect from two fiscally irresponsible poli running vanity campaigns:
The Biden administration has denounced a plan drafted by some Republican lawmakers that would raise the retirement age to 69—a modest change, and one that is hardly sufficient to avert Social Security's insolvency. Trump, meanwhile, suggested in March that he was open to “cutting” and making other changes to entitlement programs—then immediately walked back those remarks. During this year's Republican primary, the Trump campaign ran ads targeting Florida Gov. Ron DeSantis and former South Carolina Gov. Nikki Haley for their willingness to at least talk about the need for entitlement reform.
After me, the flood, right fellas?
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
