Medicare will run out of money sooner than expected, and Social Security's financial problems can't be ignored either, the government said today in a sobering checkup on programs vital to the middle class.
Social Security this year will spend more than it takes in, the program's trustees said in a new report Tuesday that signals the official beginning of the program's slide into insolvency.
Social Security will become insolvent in 2034 - no change. Medicare provides health insurance for about 60 million people, most of whom are age 65 or older. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.
The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the US government to dip into the retirement system's trust fund to pay benefits to participants.
Costs to the fund will also be slightly higher than last year's estimates, "mostly due to higher-than-expected spending in 2017, legislation that increased hospital spending and higher Medicare Advantage payments", the trust fund report said.
Excluding federal debt payments, Medicare and Social Security together make up about 40 percent of total United States government spending. About 23 percent of older married couples rely on Social Security as their main source of income, according to the program.
"The administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path", Mnuchin said in a statement on Tuesday. It's not just the growing number of beneficiaries as the baby boom generation continues moving into retirement. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200.
The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive.
In principle, the U.S.is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs. Advocates for the elderly said today there should be no cuts to Social Security benefits.
Democrats want to expand the safety net by spending more on health care and education.