The Case for Trust Fund Solutions | Committee for a Responsible Federal Budget

I’m not going to offer much in the way of comment here, but note the $3.6 trillion revenue shortfall for these trusts. Now consider that in light of the trillions of dollars in proposed new spending, some of it on permanent new programs. Sooner or later it has to come from somewhere.

The Case for Trust Fund Solutions MAR 19, 2021 | BUDGETS & PROJECTIONS

Some of the nation’s most important government programs are financed with dedicated revenue sources using federal trust funds. Four of those programs are within 14 years of insolvency.

CBO projects the following insolvency dates:

FY 2022: Highway Trust Fund (HTF)

FY 2026: Medicare Hospital Insurance (HI) Trust Fund

CY 2032: Social Security Old Age and Survivors Insurance (OASI) Trust Fund

CY 2035 Social Security Disability Insurance (SSDI) Trust Fund

Policymakers will need to act sooner rather than later to secure these trust funds by increasing revenues, reducing costs, or some combination. The longer we wait to address trust fund solvency, the fewer choices will be available and the harsher any eventual adjustments will be. In this paper, we show:

All four major trust funds are projected to run out of money in the next 14 years, with the Highway Trust Fund likely to run out next year By law, trust fund spending cannot exceed revenue once reserves are depleted. Insolvency would trigger a 7 percent cut to disability benefits, a 13 percent cut in Medicare payments, a 25 percent cut in highway spending, and an abrupt across-the-board 27 percent cut in Social Security retirement benefits.

Total spending from these trust funds will exceed revenue by roughly $3.6 trillion over the next decade. By 2051, the programs will face a combined shortfall of more than 3 percent of Gross Domestic Product (GDP).


Source: The Case for Trust Fund Solutions | Committee for a Responsible Federal Budget

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