That would have been the appropriate headline for a real news article on the release of the Social Security and Medicare trustees report, not "Trustees Project Serious Financial Challenges for Social Security and Medicare." There was nothing in these reports suggesting any qualitative deterioration in the financial state of these programs compared to their situation last year. The trustees claim, reported in this article, "that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes" is simply a lie. Under the law, both programs have distinct streams of funding in the form of a dedicated payroll tax. They have accumulated a large surplus from this tax which is available to be used to cover projected shortfalls in the decades ahead (Medicare already faces a shortfall). The fact that the expenses exceed revenue for a specific year makes no difference whatsoever for either program, as long as it has money in the trust fund to cover this shortfall. President Bush's trustees are either ignorant of the laws governing the operation of Social Security and Medicare or they deliberately misled the public, presumably to gain support for cutting these programs. Either way, the inaccuracy of their assertions is extremely newsworthy. [Addendum: Since there is enormous confusion on this point, it worth noting that the year 2017, when President Bush's trustees first project that SS expenditures will exceed payroll taxes, has no special meaning for either SS or the federal budget. As noted above, under the law, 2017 has no importance for Social Security's finances. There is a negative effect on the unified budget whenever the SS surplus declines from one year to the next. This is projected to begin to happen next year and continue for the next 32 years, until the trust fund is depleted. What matters is the fact that surplus is declining or the annual deficit is decreasing. This is the money that must be offset by either spending cuts, tax increases, or additional borrowing. Crossing zero is meaningless.]
--Dean Baker
