A Crisis That Is Here to Stay

The Foundry, Morning Bell: The Social Security and Medicare Boards of Trustees released their annual financial review yesterday, finding that over the next 75 years the two programs have promised to pay out $42.9 trillion more in benefits then they have scheduled to take in. Numbers this large and time frames that long can make the problem seem unreal, but the threat to our nation’s financial health is real and imminent. Consider:

Medicare’s hospital insurance trust fund will pay out more in benefits than it received in taxes and other dedicated revenue this year.

Within the next five years, general revenue transfers are expected to constitute the largest single source of income to the Medicare program.

Medicare’s annual costs are already 3.2% of GDP and will be 11% of GDP by 2082.

Social Security will begin to pay more in benefits than it receives in taxes in 2017.

Starting in 2010, the roughly $80 billion in annual Social Security surplus that Congress currently spends every year will begin to shrink. From that point on, Congress will have to replace that revenue stream with higher taxes or reduce overall spending.

In just 12 years, today’s $80 billion annual Social Security surplus will turn into a $75 billion annual deficit — a $150 billion swing.

Treasury Secretary Hank Paulson said yesterday, “The facts are clear: the sooner Social Security and Medicare are reformed, the fairer reform will be to future generations.” . . . [Read More]

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