In case you missed this bit of yesterday’s bad news, let me recap: Social Security and Medicare are running combined long-term deficits of $63.3 trillion according to reports released by the retirement programs’ trustees. The Medicare trust fund will be running on empty as of 2024 and Social Security’s fund will be exhausted by 2033, but the reality is much worse: both trust funds may as well be filled with kitty litter.
To cash in the IOUs the feds have stuffed in the two biggest entitlements’ trust funds to maintain the accounting fiction that they are insurance programs rather than intergenerational transfer payments, taxes will have to be raised or other government spending cut unless reforms are passed soon. Both programs for the elderly are already paying out more in benefits than they are collecting in payroll tax revenue.
“In 2011, Social Security’s cost continued to exceed both the program’s tax income and its non-interest income, a trend that the Trustees project to continue throughout the short-range period and beyond,” Social Security’s trustees explained. Although the payroll tax holiday was a factor, the program would have still run deficits without it.
“Beginning in 2008, expenditures exceeded income, and the Trustees expect this situation to continue throughout the projection period,” Medicare’s trustees wrote. And even these projections assume cuts in payments to physicians that aren’t terribly likely to happen. Congress has overriden these reductions every year since 2003.