The hospital trust fund for Medicare, the federal health care program relied on by tens of millions of older Americans and many who are disabled, is expected to run out of money by 2026, three years earlier than expected, a new federal report said Tuesday.
The updates on the health of the two largest U.S. entitlement programs were the first since December's sweeping tax cuts, which the White House said would increase growth, offsetting lost tax revenues, something economists doubt. The forecasts show no sign that a burst of economic growth will dramatically improve the finances of the government's largest entitlement programs. Last year's report put it three years later.
The report also noted social security will have to reach into its reserves this year.
Finances for Social Security and Medicare, two linchpins of the United States social safety net, worsened past year, according official projections released Tuesday.More news: Oil Falls on US Crude Build; Global Supply Rises
Trustees for the retirement and disability program revealed on Tuesday that Social Security will no longer be able to meet its obligations to beneficiaries starting in in 2034, or 16 years from now - which is less time than has elapsed since terrorists slammed airplanes into the World Trade Center and the Pentagon in 2001.
Those living off of Social Security will not likely be "dancing in the streets" with the anticipated 3% COLA, Johnson said, despite the fact that over the past nine years the COLAs have averaged just 1.2%. Medicare provides health insurance for about 60 million people, most of whom are age 65 or older. That means the government will have to dip into the trust fund to keep paying benefits in full.
President Donald Trump campaigned on a promise that he wouldn't cut Social Security or Medicare, but he hasn't offered a rescue plan for either program. And the trustees now say that program is going to be insolvent in 2026 - or roughly the same time as we are from the passage of Obamacare.
Experts said the worsening outlook for Medicare's key hospital fund in part stems from policy changes that both increase spending and decrease revenue.More news: Trump Says He Called for Free Trade at G-7
The trustees urged Congress to consider options to reduce or eliminate the long-term financing shortfalls in Social Security and Medicare "as soon as possible".
Treasury Secretary Steven Mnuchin said in a statement that there's time to fix the problems. Mnuchin added that "long-term issues persist". "Lack-luster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare".
Democrats have for months asserted that Republicans would use the deficit - swollen by tax cuts - as "an excuse to cut Social Security and Medicare", in the words of Sen. Charles Schumer of NY, the Democratic leader.
In 1960, there were about five workers for every Social Security beneficiary. It will decline further to about 2.2 by 2035, when most baby boomers will have retired, officials said.More news: EA Announces Release Date for Anthem
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