WASHINGTON (March 23) - The trust fund for Social Security will go broke in 2041 - a year earlier than previously estimated - the trustees reported Wednesday. Trustees also said that Medicare, the giant health care program for the elderly and disabled, faces insolvency in 2020.
The new projections made in the trustees annual report were certain to be cited by both sides in the massive battle to overhaul Social Security, which President Bush has made the top domestic priority of his second term.
The go-broke date for Medicare was delayed by one year, compared to the estimate that trustees gave a year ago.
The insolvency dates represent when both trust funds will have exhausted the government bonds that have been building up to take care of the pending retirement of 78 million baby boomers.
However, the more important dates are when Social Security and Medicare begin paying out more in benefits than they are receiving in taxes because that represents the time the government must start redeeming the bonds in the trust fund. To do that, the government will have to increase its borrowing on financial markets, raise taxes or divert money from other government programs.
For Medicare, the threshold when benefits exceed program income occurred last year.
For Social Security, that threshold will be crossed in 2017, one year earlier than the 2018 date projected in last year's report.
That change is certain to be cited by the administration as a sign of the urgency to act to deal with Social Security's funding woes. Democrats argue that the real crisis is in Medicare and that the administration is ignoring the health care crisis.
Social Security provides retirement, survivors and disability income for 47.7 million Americans, and Medicare provides health care for 42 million seniors and disabled people.
The six-member board of trustees for both Social Security and Medicare is headed by Treasury Secretary John Snow and includes Health and Human Services Secretary Mike Leavitt, Labor Secretary Elaine Chao and Social Security Commissioner Jo Anne Barnhart.
In addition, there are two public trustees, Thomas Saving of Texas, who has been a proponent of Bush's proposal to create private savings accounts, and John L. Palmer of New York.
While the trustees' report reflects the decisions made by the six-member board, some Democrats in Congress and other critics have been pushing to make public the recommendations that the board receives from the professional staff of the Social Security Administration.
Those recommendations are not made public, and the deliberations of the trustees also occur in secret.
Critics said the administration was able to conceal from Congress projections made by Medicare's chief actuary that the prescription drug program Congress approved in 2003 would be vastly more expensive than Congress had been led to believe.
The Center for Economic and Policy Research, a liberal-leaning research organization, said unless the recommendations upon which the trustees make their decisions are made public "there is no way of knowing whether the trustees' report is based on expert advice as opposed to political considerations."
Saving and Palmer testified to a congressional committee earlier this month that there have been no major changes in the financial outlook for either Social Security or Medicare over the past year.
Last year's report put the date that Social Security would exhaust all the resources in its trust fund at 2042. And much earlier, in 2018, the Social Security program will not be collecting enough in payroll taxes to meet its obligations to retirees, the trustees said last year.
The 2018 date is more significant because it is at that point that the government will begin cashing in the bonds that have built up in the trust fund.
However, since those bonds don't represent actual assets, the redemption process will require the government to either borrow more from financial markets, raise taxes or cut spending in other government programs to come up with the resources to meet obligations to retirees.
The situation in Medicare is even more dire. The health care program crossed the threshold where payroll taxes were not sufficient to meet medical costs for current beneficiaries last year. It will exhaust all the resources in its trust fund in 2019, according to last year's trustees report.
The financing problems of Medicare are more severe because health care costs are rising so much more rapidly than inflation.
The annual cost of Medicare is $325 billion while the cost of Social Security is $517 billion. However, the trustees projected last year that Medicare's costs would overtake Social Security by 2024 and would be nearly double Social Security by 2078. AOL News: http://aolsvc.news.aol.com/news/article.adp?id=20050323034309990002
:hitit: Wow that sucks!
The new projections made in the trustees annual report were certain to be cited by both sides in the massive battle to overhaul Social Security, which President Bush has made the top domestic priority of his second term.
The go-broke date for Medicare was delayed by one year, compared to the estimate that trustees gave a year ago.
The insolvency dates represent when both trust funds will have exhausted the government bonds that have been building up to take care of the pending retirement of 78 million baby boomers.
However, the more important dates are when Social Security and Medicare begin paying out more in benefits than they are receiving in taxes because that represents the time the government must start redeeming the bonds in the trust fund. To do that, the government will have to increase its borrowing on financial markets, raise taxes or divert money from other government programs.
For Medicare, the threshold when benefits exceed program income occurred last year.
For Social Security, that threshold will be crossed in 2017, one year earlier than the 2018 date projected in last year's report.
That change is certain to be cited by the administration as a sign of the urgency to act to deal with Social Security's funding woes. Democrats argue that the real crisis is in Medicare and that the administration is ignoring the health care crisis.
Social Security provides retirement, survivors and disability income for 47.7 million Americans, and Medicare provides health care for 42 million seniors and disabled people.
The six-member board of trustees for both Social Security and Medicare is headed by Treasury Secretary John Snow and includes Health and Human Services Secretary Mike Leavitt, Labor Secretary Elaine Chao and Social Security Commissioner Jo Anne Barnhart.
In addition, there are two public trustees, Thomas Saving of Texas, who has been a proponent of Bush's proposal to create private savings accounts, and John L. Palmer of New York.
While the trustees' report reflects the decisions made by the six-member board, some Democrats in Congress and other critics have been pushing to make public the recommendations that the board receives from the professional staff of the Social Security Administration.
Those recommendations are not made public, and the deliberations of the trustees also occur in secret.
Critics said the administration was able to conceal from Congress projections made by Medicare's chief actuary that the prescription drug program Congress approved in 2003 would be vastly more expensive than Congress had been led to believe.
The Center for Economic and Policy Research, a liberal-leaning research organization, said unless the recommendations upon which the trustees make their decisions are made public "there is no way of knowing whether the trustees' report is based on expert advice as opposed to political considerations."
Saving and Palmer testified to a congressional committee earlier this month that there have been no major changes in the financial outlook for either Social Security or Medicare over the past year.
Last year's report put the date that Social Security would exhaust all the resources in its trust fund at 2042. And much earlier, in 2018, the Social Security program will not be collecting enough in payroll taxes to meet its obligations to retirees, the trustees said last year.
The 2018 date is more significant because it is at that point that the government will begin cashing in the bonds that have built up in the trust fund.
However, since those bonds don't represent actual assets, the redemption process will require the government to either borrow more from financial markets, raise taxes or cut spending in other government programs to come up with the resources to meet obligations to retirees.
The situation in Medicare is even more dire. The health care program crossed the threshold where payroll taxes were not sufficient to meet medical costs for current beneficiaries last year. It will exhaust all the resources in its trust fund in 2019, according to last year's trustees report.
The financing problems of Medicare are more severe because health care costs are rising so much more rapidly than inflation.
The annual cost of Medicare is $325 billion while the cost of Social Security is $517 billion. However, the trustees projected last year that Medicare's costs would overtake Social Security by 2024 and would be nearly double Social Security by 2078. AOL News: http://aolsvc.news.aol.com/news/article.adp?id=20050323034309990002
:hitit: Wow that sucks!
I knew it all along...
