The Social Security and Medicare Boards of Trustees revised their latest forecast on when Social Security and Medicare funds will run out.
The new report finds that funds will be depleted sooner than predicted as Social Security’s spending output will be more than what it takes in from those paying into the program.
Medicare will run out of its current funding by 2026 and the Social Security will run out of money in 2033. The Old-Age and Survivors Insurance (OASI) Trust Fund is projected to run out of money in 2033. After that, the federal government’s tax revenue will only cover 76 percent of the costs.
Experts say there are four ways of dealing with covering the benefits: raising FICA taxes, cutting benefits, borrow more money or charge a higher co-pay for new Medicare enrollees.
David Williams from the Taxpayers Protection Alliance said, with their party controlling both chambers of Congress and the White House, some Democrats will want to raise taxes.
“The appetite to raise taxes has always been there for Democrats but I don’t think some of the moderates in their party will go along and raise taxes on employees,” Williams said.
Williams said that both parties can be blamed for not addressing these issues. However, with Democrats currently in control, Williams noted they are not offering anything when it comes to the solvency of the entitlement programs.
Williams and the Taxpayers Alliance are not alone in stressing the issues.
AARP CEO Jo Ann Jenkins weighed in on the reports this week.
“Social Security and Medicare are more crucial than ever for older Americans. Social Security is the only guaranteed source of retirement income, and Medicare provides the critical health coverage that seniors rely on and need. Today’s Trustees’ reports show that both programs are strong, but there are longer-term funding challenges to contend with. Any discussion about Americans’ earned benefits demands public input and a full and open debate. We need honest and transparent conversations, including around how Congress can help protect Medicare by lowering prescription drug prices and other health care costs. Some proposals in Congress would instead give a handful of lawmakers the power to propose cuts to Social Security and Medicare behind closed doors with minimum transparency and oversight from citizens. All members of Congress should be held accountable for any action on Social Security and Medicare,” Jenkins said.
The Concord Coalition also released a briefing on the reports.
Experts have long projected there would be a shortfall in Social Security and Medicare benefits unless Congress intervenes.
Democrats point out that both programs will still have a majority of their funding from the federal government. Social Security will be funded at 78 percent. and Medicare at 91 percent.
That doesn‘t sit well with Williams.
“So let me get this straight,” Williams said. “Democrats want to boast that the program won’t be fully funded but still mostly funded? If I paid into a program and you promised me 100 percent, then decided to cut my benefits, that’s still bragworthy to taxpayers?”
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