Social Security says system's costs will exceed income this year

  • Social Security says system's costs will exceed income this year

Social Security says system's costs will exceed income this year

The hospital trust fund for Medicare, the federal health care program relied on by tens of millions of older Americans and many who are disabled, is expected to run out of money by 2026, three years earlier than expected, a new federal report said Tuesday. The Social Security Disability Insurance Trust Fund was projected to have sufficient funds until 2032, four years later than forecast last year.

The report says Social Security will become insolvent in 2034 - no change from the projection a year ago.

The projections are the first from the administration since Trump signed a $1.5 trillion tax cut into law in December. However, certain long-term issues persist.

"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", Mnuchin said in a statement on Tuesday.

The report did not change its insolvency date for Social Security, projecting it has enough funding until 2034.

Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the U.S. ages, with many baby boomers set to retire in the next several years.

The financial future of both entitlement programs was further complicated by one of President Trump's most controversial decisions.

Officials conceded Tuesday at a news conference at the US Treasury that the tax cuts had reduced revenues for Medicare and Social Security.

During the year, an estimated 174 million people had earnings covered by Social Security and paid payroll taxes on those earnings. "Now is the time Congress should prepare for the future, not by threatening workers' benefits, but by expanding Social Security". The number of Medicare beneficiaries is expected to surge to 89 million in 2040 from 60 million today, according to Medicare actuaries. "The truth is, Social Security doesn't add a dime to the deficit and is the retirement bedrock of millions of Americans and we should keep it that way", Representative Deutch said. Social Security's cost has exceeded its non-interest income since 2010. That works out to about $31 a month.

The aging population and rising health care costs cause Parts B and D projected costs to grow steadily from 2.1% of GDP in 2017 to approximately 3.6% of GDP in 2037.