Social Security said Friday its main trust fund will run out of money in 2033, leaving the program unfunded and forcing an immediate 23% benefit cut unless Congress acts to shore up the program until then .
This deadline is a year earlier than the previous forecast from last spring and reflects the slightly deteriorating general budget situation of the federal government.
Social Security trustees said they would have to trim their economic forecasts for the next decade based on new data on high inflation and overall economic output.
Despite this grim economic news, another key trust — Medicare’s hospital insurance program, also known as Medicare Part A — improved by three years and will now be solvent by 2031, the trustees said
After that point, Medicare beneficiaries would see an 11% reduction.
Both programs are now seeing their trust funds dry up within the 10-year budget window in which Congress and the White House are working. That means the bankruptcy issue is now a real problem for budgeters, who either have to grapple with the deficit or otherwise acknowledge benefit cuts will follow.
President Biden has accused Republicans of secretly plotting Social Security cuts. But the budget he presented to Congress in early March contained no solution to the looming deficit.
Former President Donald Trump, a potential rival of Mr Biden, has also rebuked other Republicans, telling them not to touch the program.
The problem, experts say, is that doing nothing is now tantamount to supporting benefit cuts.
“Politicians who promise not to ‘touch’ these programs leave seniors with a false sense of security because doing nothing puts them at serious risk,” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a prominent watchdog group.
Social Security’s main trust fund, the Old-Age and Survivors’ Insurance Fund, has struggled for more than a decade as the aging population has meant fewer workers are paying in and more retirees are claiming benefits.
The program began in 2010 with a cash flow deficit — calculated as annual payroll taxes versus benefits paid out.
Friday’s forecast says the OASI trust fund will run out by 2033.
A smaller Social Security trust, the Disability Insurance program, is in better shape. It’s cash flow positive through 2044. With interest income, it can last through the entire 75-year actuarial window without depleting the trust fund.
In 2022, OASI started with $2.753 trillion in its trust fund. It raised $1.057 trillion but spent $1.098 trillion and depleted its reserves by nearly $41 billion.
The disability insurance program paid out $146.5 billion. Part A of Medicare paid $342.7 billion. And Medicare Parts B and D paid out $562.4 billion.
Source : www.washingtontimes.com