A report published Monday afternoon states that the United States' Social Security and Medicare funds will be completely gone by the year 2035 and eventually reduce its benefits payments to seniors unless Congress intervenes.
For years now, former United States comptroller general David Walker has been warning Americans and the federal government about the impending fiscal tsunami that is going to eventually hit the United States. Throughout his power point presentations, tours and interviews, Walker forewarns that the only thing the government is going to afford is the interest on the national debt and only some of the entitlement programs.
Charles Blahous III and Robert Reischauer, two public trustees for Social Security and Medicare and secretaries of the departments of Treasury, Labor, and Health and Human Services as well as the Social Security administrator and two public representatives, have published a new report that highlights Social Security and Medicare’s financial doom. It states that the two programs, which continue to erode, will run out of its trust fund by 2035, three years sooner than original projections.
The two trustees noted in their annual report that the long-term deficit projections for the Social Security retirement and disability programs have worsened over the past year. The report urges congress to address the problems as soon as possible in order to avoid the suffering that would inflict low-income households and seniors.
“Lawmakers should be aware that it will become increasingly difficult to avoid adverse effects on current beneficiaries, those close to retirement and low-income beneficiaries if legislative changes are delayed much further,” the report stated.
Social Security’s disability insurance failed both the long- and short-term fiscal health tests and project that the funds will run out in the next four years in 2016, which is actually two years earlier than expected.
“The [disability insurance] program faces the most immediate financing shortfall of any of the separate trust funds; thus lawmakers need to act soon to avoid reduced payments to DI beneficiaries four years from now,” the report continued.
According to the report, the disability program received $106 billion in 2011, but spent $132 billion. By the end of the year, it had $154 billion left in its trust fund. Social Security is a $736 billion behemoth in the U.S. government and is the single largest program.
Presidential candidates’ plans
Presumptive Republican nominee Mitt Romney issued a Medicare reform package in February that would not be imposed until the year 2022. In his measures, Romney would reduce insurance benefits for the wealthiest individuals in the U.S. and to slowly increase the eligibility retirement age in the future by one month each year.
Meanwhile, Texas Congressman Ron Paul, who is still pushing hard for the GOP nomination, proposed that the government should not spend a dime of entitlement programs on other budgetary measures. In his “Plan to Restore America,” Paul would give young workers the option to opt out of Social Security and block grants Medicaid to give states the flexibility they need to solve their own problems.
Former Speaker of the House Newt Gingrich, who is also staying in the race, proposed reforming Social Security by giving young workers the option to stay out of the federal retirement program and invest their payroll tax in private investment accounts.
In the president’s annual budget, there were no extensive reforms proposed for entitlement programs, including Social Security and Medicare. Although there is no information on President Barack Obama’s policies towards Social Security on his re-election website, the White House website iterates that Obama has called for a $250 Economic Recovery Payment to seniors and urged Congress to strengthen the system.
“To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations,” said President Obama in his 2011 State of the Union Address. “We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”