The Social Security and Medicare Trustees have issued their annual reports detailing the financial state of America’s two largest programs. The reports echo past conclusions: Social Security and Medicare are still going bankrupt.
According to the report, the combined (retirement and disability) Social Security Trust Funds will be bankrupt by 2035. It is important to note that these figures predate the COVID-19 pandemic and the federal response thereto, including payroll tax deferrals and credits.
In 2019, Social Security sent out benefits totaling $1,059.3 billion which unfortunately is $78.3 billion more than the $981 billion collected. 2019 marks the tenth year in a row that Social Security has seen a deficit. Cumulative deficit in funds since 2010 totals $615.6 billion.
Social Security’s promised benefits exceed projected payroll taxes and Trust Fund redemptions by $16.8 trillion, which is $3 trillion higher than estimated last year. This so-called Trust Fund will be exhausted in 15 years, running out during the same year as projected in last year’s estimate.
After the projected exhaustion in 2035, Social Security revenue will be able to only fund 79% of promised benefits, which means existing recipients will see a cut in their check. To meet promised benefits over the long term for all retirees, payroll taxes would have to be increased immediately by 25%, from 12.4% to 15.54%
The Disability Insurance Trust Fund will be exhausted in 2064 which, while an improvement, still operates at a deficit, adding $153.1 billion to the debt since 2010. Social Security’s promised disability benefits exceed projected payroll taxes and Trust Fund redemptions by over $278 billion.
The report states that at its current pace, Medicare will go bankrupt in 2026. Medicare, consisting of Parts A, B, and D, spent $796.2 billion in 2019 on medical services while only collecting $400.3 billion in payroll taxes and monthly premiums. The shortfall of $396 billion, representing 40% of the federal deficit, is covered by “borrowing” unrelated tax revenues from other programs. Medicare’s cumulative shortfall, since 1965, is $5.5 Trillion.
The Medicare Part A (hospitals) deficit in 2019 was $43.2 billion. To cover the deficit would require a 15% payroll tax increase – from 1.45% to 1.7%.
The Medicare Part B (doctors) deficit in 2019 was $271 billion. To cover this deficit would require an increase to Senior’s premiums of 273%. Current premiums of $1,626 would need to increase to $6,057 a year, an increase of $4,431.
Medicare Part D (drugs) hasn’t done any better with a cash deficit of $82 billion. In order to cover the deficit, annual drug premiums would need to rise from $398 to $2,460.
With such unprecedented levels of cash shortfalls continuing into the future means that maintaining the status quo ensures the death of the program for today’s retirees and future generations.
By 2030 there will be 77 million people on Social Security and Medicare with far too few workers funding the benefits of this population. Between 1945 and 1965, the decline in worker-to-beneficiary ratios went from 41 per retiree to 4 workers per retiree. Today there are just 2.9 workers and this is expected to drop to 2 workers per retiree by 2030. Ideally, there should be about six workers for every retiree.
Today there are more people over the age of 65 than there are under the age of five. Is it possible that the slaughter of an estimated 61,628,584 unborn babies since Roe v. Wade could be causing the worker short fall? Over 61 million future workers murdered! Perhaps it is true what they say – you reap what you sow!
Source: The Future of America’s Entitlements: What You Need to Know About the Medicare and Social Security Trustees Reports by Gordon Gray, Tara O’Neill Hayes, Andrew Strohman, American Action Forum; The Population Bust, Franklin County VA Patriots