The financial health of Social Security and Medicare, two of the nation’s most important safety-net programs, improved this year as a stronger-than-expected economy drew more workers into the labor market. But the overall financial picture for popular shows remained bleak.
Annual reports released Monday by administrators of the aging and retirement programs showed that both still face long-term deficits that could ultimately result in reduced medical and retirement benefits. Reports showed that the Social Security and disability insurance programs, if combined, would not have enough money to pay all of their obligations in 2035. Medicare will not be able to pay all of their hospital bills starting in 2036.
About 70 million people receive Social Security benefits and more than 66 million participate in Medicare.
The fate of popular shows remains a contentious political issue, which is expected to intensify as the November presidential election approaches.
President Biden has pledged to block any cuts to Social Security and Medicare and has called for bolstering the programs with higher taxes on the wealthy. Former President Donald J. Trump, the presumptive Republican nominee, suggested this year that he was open to reducing the programs when he said there was “a lot that can be done in terms of entitlements in terms of cuts.” He later retracted those comments and pledged to protect the programs.
In a statement Monday, Biden highlighted Republican proposals that would cut Social Security funding and raise the retirement age to qualify for benefits. He promised that he would be a bulwark against such policies.
“I will always fight for America’s seniors and stop Republicans from cutting Social Security and Medicare,” Biden said.
Biden administration officials said the improved outlook for the programs was a sign that Biden’s economic agenda was working and insisted they would resist any proposed cuts.
“Seniors have spent their entire lives working to get the benefits they receive, and the Biden-Harris administration will continue to oppose cuts to any of the programs,” Treasury Secretary Janet L. Yellen said in a statement. “We are committed to taking steps that protect and strengthen these programs that Americans depend on for a secure retirement.”
Social Security Commissioner Martin O’Malley said that as long as Americans continued to work, the retirement program could continue paying benefits, and he called on Congress to provide more money to the trust fund to ensure its long-term functioning. term solvency.
“More people are paying into Social Security, thanks to sound economic policies that have produced impressive wage growth, historic job creation and a consistently low unemployment rate,” Mr. O’Malley said.
Reports said the combined Social Security Old-Age and Survivors Insurance Trust Fund, which pays benefits to retirees, and the Disability Insurance Trust Fund would be depleted in 2035, a year later than previously anticipated. At that time, 83 percent of scheduled benefits would be available to be paid.
The Old-Age and Survivors Insurance Trust Fund alone is projected to run out of money in 2033, the same year as previously forecast.
The Medicare Hospital Insurance Trust Fund, which covers hospital care for Medicare patients, will not be able to pay all of its bills starting in 2036, five years later than trustees had estimated last year. The improved outlook for Medicare finances reflects stronger-than-expected payroll taxes that help fund the program. It also benefits from some recent technical policy changes that will affect Medicare spending over the next decade.
Historically, Medicare spending has grown much faster than the economy, so deficits have always been lurking. But the difference between economic growth and Medicare spending growth has narrowed over the past 15 years, a trend that has taken some pressure off the program’s finances.
But even with the improved forecast, trustees warned that making the program financially healthy in the long term would mean immediately raising Medicare taxes to 3.25 percent of wages from 2.9 percent or reducing hospital benefits from Medicare by 8 percent, or adopt larger changes if it took longer to take effect.
The report also includes a slightly improved forecast for Medicare spending on drugs and outpatient medical care in the coming decades, although those parts of Medicare are funded through general tax revenues, not specific revenue sources.
Budget experts warned Monday that despite a modest improvement in the programs’ finances, their long-term fiscal trajectory remained a cause for concern.
“Very few politicians are willing to propose serious reforms and make the difficult decisions necessary to strengthen and save the program,” said Jason Fichtner, chief economist at the Bipartisan Policy Center. “Instead, leading voices from both parties have buried their heads in the sand, proposing purely partisan policies or promising not to touch the program.”
Preserving the programs without reducing benefits remains a challenge for policymakers. However, the lobby group representing retirees urged lawmakers to find a way to ensure they remain solvent.
“For long-term sustainability, Congress owes it to the American people to reach a bipartisan solution, ensuring that people’s hard-earned Social Security benefits are maintained in full for decades to come,” said Jo Ann Jenkins , CEO of AARP. “Older Americans make up the largest voting bloc in the country and will hold leaders in Washington accountable if they fail to protect these programs.”