Social Security is now in the red, spending more than it takes in, for the first time since 1982. That’s three years earlier than projected just last year.
And it’ll continue to bleed funds for the foreseeable future, the Social Security and Medicare trustees said Tuesday.
The program can still make full payments until 2034 since Uncle Sam owes it nearly $3 trillion — the feds having used past Social Security surpluses to fund other spending.
But once that “reserve” vanishes, it’s a haircut to every Social Security check.
Meanwhile, Medicare’s own reserves are now expected to run out by 2026, three years earlier than the last trustee projection.
Behind the shortfalls: aging baby-boomers swelling the ranks of beneficiaries and slower economic growth, the trustees note.
Plus, of course, longer lifespans: Back when Social Security began, most people died before 65. And falling birth rates also mean we’ll soon have just two workers for each retiree.
Meanwhile, Medicare must pay for ever more health care, as science yields new life-extending and -improving treatments.
If lawmakers do nothing, the programs’ dedicated revenues will cover just 75 percent of Social Security’s benefits and 90 percent of Medicare’s.
The best answer is to start managing expectations and phase in adjustments now. Congress, for instance, could fix Social Security’s cost-of-living hikes to better reflect inflation. The retirement age needs to rise, too — more than the bumps now programmed in. And, yes, it’s time to talk means-testing.
But hiking payroll taxes should be out: They’re already too high, and it’s simply wrong to impose even stiffer burdens on young families.
Treasury Secretary Steve Mnuchin argues that Team Trump-fueled economic growth will gin up new cash for the programs. That’ll help — but not enough.
The trustees urge lawmakers (as they have for years) to move quickly, to allow more time to “phase in changes” and for the public to prepare — and to soften the hit to “vulnerable populations.”
It’s hard to see today’s polarized Washington doing anything so sensible. But it’s the best way to avoid a Social Security and Medicare train wreck.
