Inaction by Congress for many years has gotten us to this point.
Committee for a Responsible Federal Budget.
The Social Security and Medicare Trustees released their annual reports today showing that, before accounting for the COVID-19 pandemic, the Medicare Part A trust fund will be insolvent in just 6 years and the Social Security trust funds in 15 years. After accounting for the sharp economic downturn caused by the pandemic, the trust funds are likely to run out of reserves much sooner.
Below is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
This crisis we are living through is a painful reminder of how important it is to have a reliable safety net. Both Social Security and Medicare face major financing challenges that we need to address. Once we get through the current economic and public health crisis, we’re going to need a rescue package to save them.
Even without the pandemic, the Trustees project the Medicare Hospital Insurance program will run dry in 2026 and the Social Security funds in 2035. That means Social Security would be insolvent when today’s 52-year-olds reach the normal retirement age and today’s youngest retirees turn 77.
And when Social Security’s trust fund runs out, beneficiaries of all ages and all income levels—including the most vulnerable—will face a 21 percent across-the-board benefit cut.
Once the Trustees incorporate the effects of the current crisis on payroll tax revenue and other factors, the situation will go from bad to worse. The Medicare Hospital Insurance and Social Security Disability Insurance funds may run out in just a few years, and Social Security’s old age trust fund won’t be far behind.
It’s time for policymakers to stop kicking the can and start taking the finances of these programs seriously. Tens of millions of seniors and disabled workers are counting on them to come together on a bipartisan basis to save Social Security and Medicare.
After the coronavirus pandemic is under control and the economy has stabilized, that should be at the top of the legislative agenda.
Click here to read our preliminary analysis of the Trustees’ report.