Published: Wed, June 06, 2018
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Report warns of Medicare, Social Security financial problems

Report warns of Medicare, Social Security financial problems

If Congress fails to enact needed Social Security reforms before then, there would be sufficient funds to pay just 79% of promised benefits in 2034, slightly better than the 77% of benefits projected in last year's report. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200.

The country's main welfare program for retirees, Social Security, also faces an uncertain future.

Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the USA ages, with many baby boomers set to retire in the next several years. Medicare provides health insurance for about 60 million people, most of whom are age 65 or older.

Medical costs have long outpaced economic growth, and despite some slowdowns in cost over the past few years, that has not changed.

The Cabinet secretaries for Treasury, Health and Human Services, and Labor usually participate in the annual release of the report on Social Security and Medicare, along with the Social Security commissioner, and take questions from reporters. None of those top officials was present today; an aide cited scheduling conflicts. A 2015 budget agreement extended the solvency of the Social Security Disability Insurance trust fund by temporarily allocating a larger share of the payroll tax to fund the disability program, which was in danger of imminent depletion.

But federal deficits keep rising, and the recent Republican tax-cut bill is expected to add to the debt. The White House said the cuts would offset the initial drop in government revenue by spurring greater economic growth. The program's trustees said the shortfall trend could worsen in the decades to come.

Higher deficits mean less maneuvering room for policymakers when the day of reckoning finally arrives for Social Security and Medicare.

House Speaker Paul Ryan, R-Wis., has always been an advocate for overhauling the programs, introducing a voucher-like system for Medicare and calling for partially privatizing Social Security.

"The continued delay in enacting legislative repairs renders effective solutions more elusive and poses particular risks to economically vulnerable populations", Charles Blahous and Robert Reischauer, both former public trustees of the Social Security and Medicare Trust Funds, wrote in a joint report published by the Bipartisan Policy Center in advance of the trustees report.

Traditionally, most Democrats have not seen a need for immediate action.

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