The main trust funds for Social Security and Medicare will both run out of money in 2033 and the government at that point will have to slash benefit payments, the programs’ trustees said Wednesday in the latest warning on the country’s largest social welfare safety net.
That timetable marks a significant worsening for Medicare. Just a year ago, its Hospital Insurance fund was expected to last through 2036.
Social Security’s depletion date ticked forward less than a year, but the trustees said it, too, is in worse shape than it was a year ago.
Without changes to the law or an unexpected improvement in finances, Social Security checks would have to be cut 23% in 2033, while Medicare payments will have to be trimmed by 11% of expected benefits.
“Lawmakers have many options for changes that would reduce or eliminate the long-term financing shortfalls. Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare,” the trustees said.
They release an update every year looking at demographics, finances and spending trends, and evaluate where the two programs stand. Sometimes the insolvency date ticks forward and sometimes it slips back.
This year’s Medicare change was blamed on what the trustees called an “upward revision” in near-term spending projections. In particular, they now figure on higher inpatient and hospice care.
For Social Security, the big change was Congress and President Biden, who joined together to enact a law expanding benefits for some retirees who also had pensions. It largely covers federal state and local employees whose pensions weren’t subject to Social Security tax, and who — until earlier this year — didn’t receive benefits.
“As in prior years, we found that the Social Security and Medicare programs both continue to face significant financing issues,” the trustees said.
That call has done little to prod a reluctant Congress.
Republicans are pushing to pass a massive budget bill that cuts taxes and imposes limits on other safety net programs, but President Trump has said Social Security is to be untouched.
Whichever party does attempt changes in that program or Medicare has faced vicious political attacks, making Capitol Hill afraid to propose the kinds of changes experts say would be needed — tax increases and benefit cuts — to get the programs back on firm footing.
Indeed, the Social Security pensions change, overwhelmingly approved by a bipartisan Congress last year and signed by Mr. Biden, signals lawmakers are more comfortable deepening the fiscal problems.
