Social Security and Medicare annual report warns of coming crisis
On Tuesday, Social Security and Medicare Board of Trustees released their 2018 Annual Report which estimated significant shortfalls in Medicare as early as 2026 – three years earlier than last projected – and that the Social Security Trust Fund will be depleted by 2034, the same year as previously reported, but concerning all the same. The report also stated this year Social Security’s total cost is projected to exceed its total income for the first time since 1982, and will remain higher into the future.
Basically, Social Security and Medicare are spending more than they will take in due to increased costs and the decline of workers paying into the system. This deficit will continue as the baby-boom population ages further expanding rolls. And 2017’s Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues.
In less than a decade, the programs will have to face tough choices as to how to address the looming crash. In simple economic terms, the government must balance the equation by either giving the programs more money (raising taxes) or cutting costs (reducing benefits), both moves that in his campaign candidate Trump said he would never do.
In a statement also issued yesterday, US Treasury Secretary Steven Mnuchin, attributed the accelerated weakening of the programs on sluggish economic growth saying,
“The programs remain secure… However, certain long-term issues persist. Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare.
“The Administration’s economic agenda – tax cuts, regulatory reform, and improved trade agreements – will generate the long-term growth needed to help secure these programs and lead them to a more stable path.
“Social Security and Medicare are the federal government’s two largest programs, and millions of Americans heavily rely on their benefits. Robust economic growth will help to ensure their lasting stability.”
However, as currently projected, it is highly unlikely that economic growth absent larger reforms could solve the programs’ huge budget quagmire. Yet the Trump Administration has not offered any further plan to address the projected shortfalls.
Washington State had 1,190,127 Medicare enrollees in 2015 and 1,319,176 Social Security recipients in 2017. Both numbers are expected to rise as the population ages making the financial health of both programs integral to Washington’s future health as well.