Year Of Inaction Has Increased Program's Debt
(WASHINGTON , D.C.) May 1, 2006 – The Social Security and Medicare Trustees released their annual report on the future health of the nation's elderly entitlement programs today, and their findings were chilling. According to a review of the report's findings by John C. Goodman, president of the National Center for Policy Analysis (NCPA), the unfunded liability of the recently enacted prescription drug benefit for Medicare surpasses that of Social Security.
Social Security will start paying more in benefits than it collects in taxes in 2017, the same as estimated in last year's report. Yet while the total unfunded liability of the program has increased by about $2.3 trillion, up from $11.1 trillion to $13.4 trillion, the unfunded liability of Medicare Part D is $16.2 trillion. The Medicare HI Trust Fund runs out in 2018, two years earlier than previously estimated.
"Social Security's future has gotten worse and each year we delay reform adds to the cost we are pushing off onto our children," said NCPA President John C. Goodman. "Yet while the administration was right to try to reform Social Security last year, their drug benefit made the situation much worse. It was akin to throwing gas on the fire."
Any redemption of the assets in these programs' Trust Funds will require resources from somewhere else in the federal budget. And these transfers are already happening. For example:
- Today: The federal government will have to use 5.3 percent of general revenue to pay the combined benefits for Social Security and all of Medicare. That's in addition to the payroll tax dollars already collected for these programs.
- By 2020, Social Security and Medicare's funding shortfalls will equal about 27 percent of all federal income dollars.
- By 2041, the year the Social Security Trust Fund no longer contains any obligation bonds, the two programs will require 64.3 percent of all federal income tax dollars.
- By 2080, the two programs will require more than (91.8 percent) the government is scheduled to collect in federal income taxes.
"The choices for saving both systems are going to be tough," said Goodman, "but they only get tougher the longer we wait, and they pale in comparison to the future if we do nothing."