Go-broke dates pushed back for Social Security, Medicare

[BumRushDaShow]

Source: Washington Post

WASHINGTON — A stronger-than-expected economic recovery from the pandemic has pushed back the go-broke dates for Social Security and Medicare, but officials warn that the current economic turbulence is putting additional pressures on the bedrock retirement programs. The annual Social Security and Medicare trustees report released Thursday says Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034. The year before that it estimated an exhaustion date of 2035.

The projected depletion date for Medicare’s trust fund for inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026. “Economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of the trust funds in these reports,” the report states. President Joe Biden said in a statement that the report “shows that the strong economic recovery driven by my economic and vaccination plans has strengthened programs that millions of Americans rely on and has put our nation in a better fiscal position.”

Forecasters said in the report that the ongoing COVID-19 pandemic will have no net effect on their long-range projections. But they also noted that assumptions for their latest report were made in February, which was before cases began climbing again nationally and inflation rose even higher. Social Security pays benefits to more than 65 million Americans, mainly retirees as well as disabled people and survivors of deceased workers. Medicare covers roughly 64 million older and disabled people.

When the Social Security trust fund is depleted the government will be able to pay 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted. Income for Medicare’s hospital insurance fund is projected to be higher than estimates from last year because the number of covered workers who help fund it and their average wages are both expected to be higher. A main source of financing is payroll taxes on earnings paid by employees and employers. About 183 million people paid those taxes in 2021.

Read more: https://www.washingtonpost.com/politics/go-broke-dates-pushed-back-for-social-security-medicare/2022/06/02/5355d62a-e2ad-11ec-ae64-6b23e5155b62_story.html

---

Heard this early this morning on the radio.

[progree]

1. Non-paywalled link to same article

Go-broke dates pushed back for Social Security, Medicare, AP, 6/2/22
https://www.msn.com/en-us/news/us/go-broke-dates-pushed-back-for-social-security-medicare/ar-AAY0suU?ocid=msedgdhp&pc=U531&cvid=97d816e106574e309a079ae96b8314a4

Worth highlighting:

When the Social Security trust fund is depleted the government will be able to pay 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted.

These programs don't go away after the trust funds are exhausted. Under current law (i.e. if the law isn't changed), the payroll taxes that fund these programs continue, and (according to projections) will be sufficient to fund 80% of S.S.'s scheduled benefits and 90% of Medicare's Part A benefits. To get these benefits to 100% and 100%, Congress will have to act.

[BumRushDaShow]

3. Some perspective

JUST OUT: Medicare To Be Broke By 2024, 5-Years Sooner Than Expected

Joe Weisenthal
May 13, 2011, 12:47 PM


The two big government entitlement programs, Medicare and Social Security, are going broke sooner than expected.

From C-SPAN:

The Medicare and Social Security Trustees report says Social Security and Medicare will run out of money sooner than anticipated. The annual report, which provides an update on the solvency and cost of the two entitlement programs, blames the sluggish economy for the changes.

The Hospital Insurance fund, which pays for hospital stays will run out in 2024, which is five years earlier than last year's report anticipated. The Social Security Trust Fund, which enables the payout of full benefits, will be exhausted in 2036.

(snip)

https://www.businessinsider.com/just-out-medicare-to-be-broke-by-2024-5-years-sooner-than-expected-2011-5

It's a racket.

No, Social Security and Medicare Aren’t Going “Bankrupt”

April 25, 2012, 1:09 pm

Note: We've revised the graph in this post. Some news media and policymakers have seriously misrepresented the findings of the 2012 Social Security and Medicare trustees’ reports. The CBS Evening News reported, “Medicare will run out of money in 2024. Social Security retirement benefits run out in 2035.” The Republican Doctors’ Caucus says that Medicare is going “bankrupt.” Such assertions are extremely misleading, as our new paper explains. The trustees project that the combined Social Security retirement, survivors, and disability trust funds will be “exhausted” — in the technical sense of the term — in 2033 and Medicare’s Hospital Insurance (HI) trust fund in 2024. (Social Security’s retirement and survivors’ trust fund, taken alone, will be exhausted in 2035.) But this does not mean that Social Security and Medicare will have no more financial resources and cease to pay benefits on these dates, as “running out of money” or going “bankrupt” suggests.

(snip)

https://www.cbpp.org/blog/no-social-security-and-medicare-arent-going-bankrupt

(I know it's an "annual" report and the dire warnings briefly appear and then flame out of the news cycle)

[progree]

20. I'm not getting the "racket" part

I went ape-shit in #18 below

If you mean the media's way of reporting it "bankrupt", "go-broke", etc., and other language that makes it sound like the program is going to expire when the trust funds run out, yes, that is deplorable and false.

As mahatmakanejeeves would say, "from the source" (all 4 SS and Medicare trustees are high level Biden appointees)
https://www.ssa.gov/oact/trsum/

Just a couple of paragraphs to show the language:

At the end of 2021, Social Security’s trust fund reserves were $2,852 billion, having decreased by $56 billion over the year. The Trustees project that the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay full benefits on a timely basis until 2034, a year later than in last year’s Social Security report. For the first time since the 1983 Trustees Report, the Disability Insurance (DI) Trust Fund is projected to be able to pay full benefits through the end of the 75-year projection period (2096 for this year’s report). Last year’s report projected DI Trust Fund depletion in 2057. The DI Trust Fund’s reserve depletion date is very sensitive to changes in program cash flows and the Trustees have lowered anticipated long-range disability incidence rates in this year’s report. The number of disabled-worker beneficiaries in current payment status continued to fall in 2021, as it has since 2014.

The projected reserve depletion date for the combined OASI and DI funds is 2035, a year later than in last year’s report.1 Over the 75-year projection period, Social Security faces an actuarial deficit of 3.42 percent of taxable payroll, decreased from the 3.54 percent figure projected last year. The main reasons for the smaller deficit are a stronger than expected recovery from the pandemic-induced recession, higher expected levels of labor productivity, and lower future disability incidence rates that reflect recent experience. The actuarial deficit equals 1.2 percent of gross domestic product (GDP) through 2096.

All emphasis is mine. Edit: the first line I bold-faced was just to point out that the Social Security trust fund is decreasing, as revenue (payroll taxes plus taxation of S.S. benefits plus interest earnings) is insufficient to pay benefits, a development that first began in 2021 and is expected to continue until trust fund depletion (Table 6 in https://www.ssa.gov/oact/trsum/)

Notice they use the word "depletion". I searched the page for "bankrupt" (no hits) and "solven" (as in solvent and solvency) 1 hit:

Sustainable solvency beyond the end of the 75-year period would require larger payroll tax rate increases and/or benefit reductions than those needed on average for this report’s long-range period (2022-96).

I searched for "deple" (as in depleted, depletion, etc.) -- 26 hits.

[BumRushDaShow]

22. "Racket" in how the media headlines this annual report every year

as being this -





My example was from 2011. Here's one from 2005!

Trustees Foresee an Earlier Insolvency for Social Security

March 23, 2005


WASHINGTON, March 23 - The Social Security and Medicare programs will run short of money even faster than recent projections had anticipated, trustees for the programs said today in a report that immediately intensified an already bitter political debate. Beginning in 2017, not 2018 as previously projected, the revenue from Social Security payroll taxes will be less than the benefits the government will be paying out, Treasury Secretary John W. Snow said, forcing the government to dip into reserves.

Moreover, those reserves, which have been built up by surpluses and will keep benefits at their normal levels even after payroll taxes are insufficient, will be depleted in 2041, not 2042, as previously anticipated, Mr. Snow said. After 2041, under the new projections, the government could pay only three-quarters of the promised level of benefits. "The numbers published today leave no question that Social Security reform is needed, and it is needed soon," Mr. Snow said in a message accompanying release of the trustees' report.

"Reform of this system, for the sake of our children, grandchildren and the financial future of our country, is a very real and pressing matter." And Medicare faces even greater long-range challenges, Mr. Snow said, because of spiraling increases in health care costs in addition to the demographic trends: baby-boomers marching into retirement, to become an army of beneficiaries.

Mr. Snow said Medicare's hospital insurance trust fund is now projected to become insolvent in 2020 - a year earlier than anticipated in last year's report. President Bush and his Republican allies in Congress can be expected to seize upon today's report to argue that changes are needed now - and Democrats were already accusing Republicans of distortion and promoting unsound ideas.

(snip)

https://www.nytimes.com/2005/03/23/politics/trustees-foresee-an-earlier-insolvency-for-social-security.html

It provides an injection of "talking points" if it's a slow news day.

[jimfields33]

2. I begin in 2036 (67 years old)

I always thought the checks were too small as is. I can’t imagine another 20 percent knocked off. Lots of suffering in the future for many.

[Ford_Prefect]

4. Ask Mcturtle and the others in the GOP senate caucus if this concerns them at all.

I suspect that the sound of crickets will be prominent in their responses.

[Traildogbob]

5. Ask Rick Scott

[3Hotdogs]

6. Raise the cut-off for contributions to the payroll taxes.

Covid must have put one hell of a "ding" in the Medicare and Medicaid accounts.

[Captain Zero]

29. Covid dinging the SS Survivors fund most likely

Covid deaths of wage earners with minor children means those minor children are eligible until age 18 (21 if in college).

Also violent gun deaths of family wage earners means THEIR minor children are eligible for SS Survivors benefits. These benefits also need to be figured into the true cost of gun violence.

[3Hotdogs]

7. They have been trying to eliminate S.S. since its beginning. I believe it waS Alf Landon's platform

when he ran against F.D.R.

Of course, he applied for and received S.S. benefits as did the Patron Saint of Self Reliance, Ayn Rand.

[riversedge]

8. The GOP platform is to sunset SS and Medicare. They do NOT care. NOT ONE BIT!!!

[IronLionZion]

10. They figure COVID will only help

by reducing the number of elderly

[SouthernDem4ever]

12. Is Susan Collins concerned?

[dsc]

9. I hate the narrative behind these stories

the fact is enough money flowed into SS to pay those benefits. In 1983 a bill was passed that converted SS from pay as you go to a trust fund system. That means people my age and younger have been paying both the benefits of those who came before us and our benefits with our SS taxes. In other words, SS started running massive surpluses which were used to help offset the massive debts our government ran up under GOP Presidents. That money should be paid back, with interest. Given that much of the debt was run up by tax cuts for the rich and increases in defense spending, taxes should be increased on the rich and defense spending should be cut. There is no reason that we can't have 40 years of SS taking money from the general treasury instead of giving money to it. It is, after all, SS money.

[BumRushDaShow]

11. That's why I posted this above

https://www.democraticunderground.com/?com=view_post&forum=1014&pid=2925321

The media headlines for these annual reports are "a racket".

[GregariousGroundhog]

16. The Social Security Trust does earn interest

By law, the Social Security Trust must invest it's excess funds in special issue government bonds. The interest offered by the Treasury on those special issue government bonds is equal the the average market rate on publicly issued securities from the previous month which had a duration of four years or longer and rounded to the nearest eighth of a percent. You can see the rates here:

https://www.ssa.gov/oact/progdata/newIssueRates.html

In 2035, the Social Security Trust will have sold all of its special issue bonds back to the federal government and will only be capable of paying 80 cents on the dollars.

[progree]

21. 👆Yes, that's right 😊

[area51]

19. +1 n/t

[Farmer-Rick]

13. I expected better from WaPo

First, the Trust fund of almost $3 trillion is supposed to empty out after all the Baby Boomers pass away. And then workers will have a pay for their own SocSec retirement through their own pay not through the pay of younger workers. That's what Reagan and Greenspan set up when they made full retirement age older. Before Reagan, I could get full retirement at 65, but now I have to wait until 66 and 6 months.....the number of the beast?

Then they combine the reports of the boards. Medical and SocSec boards are separate boards but they share board members and executive departments. So, that when the medical side inevitably loses money and funding because of our awful medical system, they can then say SocSec is losing money too.

It's a con and we still have nearly $3 Trillion in SocSec that the the filthy rich want to get their hands on. That's the honey pot they want and are running a long con to get their hands on it. I'm surprised WaPo buys into the conflation and misdirection.

[BumRushDaShow]

14. As I posted upthread here

https://www.democraticunderground.com/?com=view_post&forum=1014&pid=2925321

it's a "racket".

They all (not just WaPo) do this every year. They were saying it 10 years ago too... It's clickbait.

[Farmer-Rick]

15. Yeah, and so many people buy into it.

Thanks for putting the truth out.

[ShepKat]

17. does it count what's been taken for other purposes ?

it has been pilfered after all... it should by get paid back

[progree]

18. It hasn't been pilfered. BY LAW, each year the surpluses are loaned to the federal government

Last edited Fri Jun 3, 2022, 12:51 PM - Edit history (2)

and no, that didn't start with Reagan. Nor did it start with LBJ. It has been that way from the beginning.

The government in turn creates special issue treasury securities that are deposited in the Social Security and Medicare trust funds. These earn interest -- paid in the form of more special issue treasury securities. In a year when Social Security revenues fall short of benefits then trust fund securities are redeemed to make up the difference. This is already occurring:

"At the end of 2021, Social Security’s trust fund reserves were $2,852 billion, having decreased by $56 billion over the year." - Source: 2022 Trustees report, https://www.ssa.gov/oact/trsum/

Similarly the Medicare Trust fund.

Anything you read about "pilfering" of the programs is literal fucking bullshit.

Social Security Trustees 2022 report -- https://www.ssa.gov/oact/trsum/

Edited to add, from the above link:

Federal law requires that the Trustees invest all excess funds in interest-bearing securities backed by the full faith and credit of the United States. The Department of the Treasury currently invests all program revenues in special non-marketable U.S. Government securities, which earn interest equal to rates on marketable securities with durations defined in law. The balances in the trust funds, which represent the accumulated value, including interest, of all prior program annual surpluses and deficits, provide automatic authority to pay benefits.

(By the way, the 4 trustees are all high level Biden administratrion appointees. This isn't a report by right wing economists or the right wing media or such)

The report is signed by:
    Janet Yellen, Secretary of the Treasury, and Managing Trustee of the Trust Funds.
    Xavier Becerra, Secretary of Health and Human Services, and Trustee.
    Martin J. Walsh, Secretary of Labor, and Trustee.
    Kilolo Kijakazi, Acting Commissioner of Social Security, and Trustee.

Actuarial Note #142 of January 1999 (how interest rate determined, the trust fund securities etc.) http://www.ssa.gov/OACT/NOTES/note142.html

[KPN]

24. Thank you for those FACTS progree.

[ShepKat]

26. pilfer was MY word

so calm yer jets... sorry I blew up.

[Warpy]

23. Of course they were, because WAGES FINALLY WENT UP!

I don't know what is so fucking hard for these people to understand, when people at the bottom earn more money, that means the dollar amounts of their flat rate OASDI and Medicare taxes goes up, too.

When the rich get a windfall, their contribution stays the same, if there's any contribution at all.

It might even be easier for Democrats to balance the books until the next spendaholic Republican gets in, depresses wages, and cuts the taxes the rich hardly pay, anyway.

[sarcasmo]

25. GOP talking points keep dropping like flies.

[PSPS]

27. "Go-broke" is false and using it in the headline is an intentional effort by WP to undermine SS

[LudwigPastorius]

28. Yay!

One less year I’ll have to eat cat food.