The fiscal health of Social Security and Medicare, two of America's most important safety net programs, improved this year as a stronger-than-expected economy drew more workers into the labor market. However, the overall financial outlook for the popular show remained bleak.
Both continue to face long-term shortfalls that could ultimately lead to cuts in retirement and health benefits, according to an annual report released Monday by trustees of the old age and retirement programs. be. Social Security and disability insurance programs combined will not have enough money to pay all obligations by 2035, according to the report. Medicare will no longer be able to pay all health insurance claims starting in 2036.
Approximately 70 million people receive Social Security benefits and more than 66 million participate in Medicare.
The fate of the popular show continues to be a controversial political issue, and that issue is expected to intensify as the November presidential election approaches.
President Biden has promised to halt cuts to Social Security and Medicare and called for tax increases on the wealthy to shore up the programs. Former President Donald J. Trump, a leading Republican candidate, suggested earlier this year that he was open to scaling back the program, saying, “There's a lot that can be done on the entitlement side in terms of cuts.” . He later retracted those comments and promised to protect the program.
In a statement Monday, Biden highlighted Republican proposals to cut Social Security funding and raise the retirement age to qualify for benefits. He promised to be a bulwark against such policies.
“I will always fight for America's seniors and stop Republicans from cutting Social Security and Medicare,” Biden said.
Biden administration officials said raising the program's outlook is a sign that Biden's economic policies are working and insisted they would resist any proposed cuts.
Treasury Secretary Janet L. Yellen said in a statement: “Older adults have worked their whole lives to earn the benefits they receive, and the Biden-Harris Administration will continue to oppose cuts to either system.” . “We are committed to taking steps to protect and strengthen these programs that Americans rely on for a secure retirement.”
Social Security Secretary Martin O'Malley says retirement systems can continue paying benefits as long as Americans continue to work and urged Congress to provide more money to trust funds to guarantee those long-term benefits. I asked for it. Term solvency.
“Thanks to strong economic policies that have resulted in impressive wage increases, historic job creation, and stable and low unemployment rates, more people are enrolling in Social Security,” O'Malley said.
The report says the combined Social Security Old Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund, which pay benefits to retirees, will run out in 2035, one year later than previously predicted. At that point, 83% of scheduled benefits will be paid.
The Old Age and Survivors Insurance Trust Fund alone is predicted to run out of money in 2033, the same as previously predicted.
The Medicare Hospital Insurance Trust Fund, which covers hospital care for Medicare patients, will no longer be fully payable starting in 2036, five years later than the trustees estimated last year. The improved fiscal outlook for Medicare reflects higher-than-expected payroll taxes, which fund the program. It also benefits from recent technology policy changes that will impact Medicare spending over the next decade.
Medicare spending has historically grown far faster than economic growth, posing a permanent shortfall. However, the gap between economic growth and Medicare spending growth has narrowed over the past 15 years, a trend that has eased some of the pressure on program finances.
But even with improved projections, the trustees believe that in order to make the program financially sound in the long term, they must either immediately raise the Medicare tax from 2.9% of wages to 3.25% or increase Medicare hospitalizations. It warned that this would mean cutting benefits by 8% or, if changes were necessary, adopting larger changes. It took a while to kick in.
The report also includes slightly improved projections for Medicare spending on drugs and outpatient care over the next few decades, although these parts of Medicare are funded by general tax revenues rather than dedicated resources. .
Budget experts warned Monday that while the program's finances have improved slightly, concerns remain about its long-term fiscal trajectory.
“Too few politicians are willing to propose serious reforms and make the hard choices necessary to strengthen and save programs,” said Jason Fichtner, chief economist at the Bipartisan Policy Center. “Instead, major voices on both sides of the aisle have buried their heads in the sand, proposing purely partisan policies or vowing not to touch the program.”
Maintaining the program without cutting benefits continues to be a challenge for lawmakers. But lobby groups representing retirees urged lawmakers to find ways to help retirees remain solvent.
AARP Chief Executive Jo Ann Jenkins said, “For long-term sustainability, Congress has reached a bipartisan solution for Americans to protect their hard-earned Social Security benefits. “We have an obligation to ensure that this is available for decades to come.” “Older Americans make up the nation's largest voting group and will hold leaders in Washington accountable if they fail to protect these systems.”
