US Social Security and Medicare Approach Insolvency, Warns Trustees

By Naveen Athrappully | 3 June 2022

THE EPOCH TIMES — Both Social Security and Medicare programs are heading towards insolvency in the coming years, according to annual reports released by the Trustees of the two programs.

The Social Security program will be insolvent in 13 years by 2035, the Social Security Trustees said in its report (pdf). Though the finances of the Social Security program have improved slightly when compared to last year, it still remains in peril.

At present, the program cannot guarantee full benefits to current retirees. The Social Security Old-Age & Survivors Insurance (OASI) trust fund is predicted to deplete its reserves by 2034.

Though the Social Security Disability Insurance (SSDI) trust fund is expected to remain in strong financial condition, the combined trust fund will deplete by 2035 when today’s youngest retirees turn 75, and 54-year-olds enter full retirement age.

Once the program becomes insolvent, all beneficiaries will face an across-the-board benefits cut of 20 percent.

This year, the Trustees estimate Social Security to run a cash-flow deficit of $112 billion, which comes to 1.3 percent of taxable payroll. […]

2 Comments on US Social Security and Medicare Approach Insolvency, Warns Trustees

  1. There is no such thing as ‘insolvency’ for these programs (typically called entitlements) — the US can create as much of its own currency as necessary to cover necessary outlays; politicians have not had strong (enough) reservations before about running huge deficits to fund far less important spending — of course the question then is what will be the effect on the USD?

    For decades after its introduction, the government collected more in FICA tax than it paid out in benefits — the excess was exchanged for treasury debt (the phony ‘trust fund’); the money was then spent — so it was always going to be the case that entitlement outlays would be 100% funded out of current revenue and 100% by taxpayers, i.e. whether taxes or interest on the debt held in the ‘trust fund’.

    In the past these programs were often called the ‘third rail’ of American politics — now this seems to be more things like support for Israel or having the correct views on race.

    No one is due, or ‘entitled’ to, any SS payments, no matter how much tax was paid — the courts have ruled on this: SS it just a tax, and the revenue is dispersed per current law — so I expect means testing to get serious consideration — for years I have been asking: why will increasingly less well off, racially diverse taxpayers want to fund these programs for better off, mostly white boomer retirees?

Post a Comment

Winter Watch

Discover more from Winter Watch

Subscribe now to keep reading and get access to the full archive.

Continue reading