Social Security and Medicare Don't Look So Hot

Social Security will run out of funds in 2033—sooner than forecast last year—according to a new government report. Medicare's hospital insurance fund will be gone by 2024. Together, the programs account for 35 percent of all federal spending, and if the trust funds—which are made up of the difference between the payroll taxes paid toward the programs and the benefits doled out—were depleted, benefits would be automatically cut by 25 percent. Social Security's disability insurance faces the soonest expiration—it is now scheduled to run out of money  in 2016, two years earlier than projected last year. “By almost any objective measure, the financial health of the Social Security system has entered a concerning decline," the two public trustees of the programs said yesterday in a statement.

These two programs have been resistent to a legislative overhaul thanks to their longstanding popularity, but the next generation to hit 65 might see far fewer benefits if the current system isn't fine-tuned. The recession and high unemployment numbers play a role in the pessimistic Social Security predictions, but so do the unprecedented number of citizens collecting benefits. In 2017, Social Security will pay out $1 trillion in benefits—$275 billion more than last year. In 2011, an average of 100,000 senior citizens joined Medicare every month.

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Comments

Social Security can pay 100% of benefits after 2033, and even modestly expand benefits today, if Congress makes one simple change: eliminate Social Security’s cap on taxable income (now set at $110,100) so high income earners pay the same tax rate as middle class workers: http://washingtonpolicywatch.org/2012/04/23/the-simple-social-security-fix-no-one-wants-to-talk-about/

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