Social Security Slipping Closer to Insolvency, Government Warns
The nation’s Social Security and Medicare programs are sliding closer to insolvency, the federal government warned in a new report underscoring the fiscal challenges facing the two mammoth retirement programs as baby boomers begin to retire.
Medicare, which will provide health insurance to more than 50 million elderly and disabled Americans this year, is expected to start operating in the red in its largest fund in 2024, according to the annual assessment by the trustees charged with overseeing the programs. That’s unchanged from last year.
And the Social Security trust fund, which will provide assistance to more than 45 million people in 2012, will be unable under current trends to fulfill its obligations in 2033, three years earlier than projected last year.
“We must take steps to keep these programs whole for the future,” Treasury SecretaryTimothy F. Geithner, the senior trustee, told reporters Monday.
If the Social Security and Medicare funds were exhausted, they would still be able to pay benefits because they would continue to collect tax revenue. But the deficits would likely force major cuts.
The dismal outlook was fueled in part by the sluggish economy, which has slowed growth in payroll taxes that sustain the trust funds, according to the trustees, who include administration Cabinet secretaries and two public representatives.
That sparked a round of calls from around Washington on Monday for a new effort to tackle the entitlement programs. Most immediately, the trust fund that pays for disability benefits for more than 10 million people is projected to run out of money in four years.