Social Security On Course to Run Short of Cash Ahead of Projections
WASHINGTON — The Social Security Trust Fund is projected to run short of cash by 2033, one year earlier than projected last year, according to a report released Friday.
The report followed a meeting of the Social Security and Medicare Boards of Trustees, and was released by the U.S. Department of the Treasury – joined by Departments of Health and Human Services and Labor, the Centers for Medicare & Medicaid Services, and the Social Security Administration.
According to a fact sheet from the trustees, The Old-Age and Survivors Insurance Trust Fund will only be able to pay 100% of total scheduled benefits until 2033. At that time, that fund’s reserves will become depleted and continuing program income will be sufficient to pay 77% of total scheduled benefits.
If the OASI Trust Fund and the DI Trust Fund projections are added together, the resulting projected fund would be able to pay 100% of total scheduled benefits until 2034, one year earlier than reported last year. At that time, the projected fund’s reserves would become depleted, and continuing total fund income would be sufficient to pay 80% of scheduled benefits.
U.S. Senator Bill Cassidy, M.D., R-La., said in a written statement, “Social Security is going broke a year sooner than we thought. Choosing to do nothing guarantees a 24% cut in Social Security for all current and future retirees. The president needs to show leadership by engaging with Democrats and Republicans … the greatest threat to Social Security remains politicians who choose to do nothing.”
In a release accompanying the report, Treasury Secretary Janet L. Yellen said, “Social Security and Medicare are two bedrock programs that older Americans rely upon for their retirement security. The Biden-Harris administration is committed to ensuring the long-term viability of these critical programs so that retirees can receive the hard-earned benefits they’re owed.”
The report went on to say, “The projected long-term finances of the Hospital Insurance Trust Fund improved since last year’s report. The improvement is mainly due to lower projected health-care spending stemming from updated analysis that uses more recent data.
“Supplementary Medical Insurance Trust Fund expenditures for Medicare Part B as a share of GDP are also projected to be lower than previously estimated in part for the same reason. In addition, expenditures on drugs under SMI in Medicare Parts B and D are projected to be markedly lower as a share of GDP due to the impact of provisions of the Inflation Reduction Act, which became law in August 2022.”
“Social Security and Medicare are essential commitments to our seniors that must be protected – millions of Americans have paid into these programs throughout their lives and deserve the benefits they’ve earned. Today’s report expands the Medicare trust fund’s lifespan by three years while Democrats’ historic drug pricing slashes Medicare drug spending and puts money back in consumers’ pockets.,” said Rep Richard Neal, D-Mass., in a written statement.
“The Trustees continue to recommend that Congress address the projected trust fund shortfalls in a timely fashion to phase in necessary changes gradually,” said Kilolo Kijakazi, acting commissioner of Social Security. “Social Security will continue to play a critical role in the lives of 67 million beneficiaries and 180 million workers and their families during 2023. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.”
Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a New York-based government watchdog group dedicated to drawing attention to America’s long-term fiscal issues, said the new trustee reports make clear “that when it comes to the future of Social Security and Medicare, doing nothing is simply not an option.”
“If lawmakers fail to act on Social Security, within a decade all current retirees would face a 23% automatic cut, reducing the average annual benefit by $6,000 and growing every year,” he noted. “In only eight years, Medicare faces an automatic cut to providers that could affect more than 77 million beneficiaries.”
Peterson went on to say that politicians who promise not to “touch” these programs are leaving seniors with a false sense of security.
“Because doing nothing puts them in serious jeopardy,” he said. “And there are many established reforms that exempt current beneficiaries from changes.
“Ultimately, ignoring these trustee reports won’t make our nation’s entitlement problems go away, it will just make them more difficult to fix down the road. As Congress debates the debt ceiling and this year’s budget, everything should be on the table. Lawmakers have a valuable opportunity to stabilize these cornerstone programs, while bolstering our nation’s fiscal and economic outlook at the same time,” Peterson said.
The Social Security Report is available here, and the Medicare Trustees Report is available here. A fact sheet summarizing the reports can be viewed here.