Social Security says system's costs will exceed income this year

Grant Boone
June 6, 2018

Indeed, the trustees of Social Security and Medicare forecast the program's reserves will be depleted by 2034, at which point it won't be able to pay full benefits on a timely basis.

But that may be the past year of growth for the foreseeable future.

The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the US government to dip into the retirement system's trust fund to pay benefits to participants. Asset reserves as of 2017 were $2.9 trillion.

The DI trust fund, on the other hand, is projected to be exhausted in 2032, extended from last year's estimate of 2028.

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 Senator Chuck Schumer of NY, the Democratic leader.

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A separate projection released on Tuesday showed it will become insolvent in 2034 - the same estimate as a year ago. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.

Each year, the trustees project the long-term finances of Medicare, which covers about 58 million Americans. During the same period, about 62 million people received benefits, including retired and disabled workers, their eligible family members and survivors of deceased workers.

Excluding federal debt payments, Medicare and Social Security together make up about 40 percent of total USA government spending. With Social Security that could mean sharply reduced payments for some retirees, many of whom are already on tight budgets. Advocates for the elderly said today there should be no cuts to Social Security benefits.

"The continued delay in enacting legislative repairs renders effective solutions more elusive and poses particular risks to economically vulnerable populations", Charles Blahous and Robert Reischauer, both former public trustees of the Social Security and Medicare Trust Funds, wrote in a joint report published by the Bipartisan Policy Center in advance of the trustees report. It's not just the growing number of beneficiaries as the baby boom generation continues moving into retirement.

Democrats, meanwhile, want to extend the social safety net by spending more on health care and education.

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