Bloomberg reports that government overseers of Medicare and Social Security have said that Medicare will run out of money by 2035. Thus far, government leaders have been unable to even address the issue.
On the one hand, Trump has said no cuts will be made to the retirement program. Democratic candidates for president have called for expansions of Medicare benefits rather than truly taking into account the lack of money for the program.
“The programs that millions of Americans pay into and expect to have in the future are going broke — driving up federal spending, growing our deficits, and crowding out other priorities in the process. We cannot afford to ignore this reality any longer,” said Arkansas Rep. Steve Womack, ranking Republican on the Budget Committee.
Potential solutions to the issue, such as raising payroll taxes or raising the Medicare retirement age, are so politically poisonous that most people in Washington choose to ignore the issue entirely.
Three Cabinet heads and the Social Security’s acting commissioner encourage lawmakers to "take action sooner rather than later to address these shortfalls, so that a broader range of solutions can be considered and more time will be available to phase in changes while giving the public adequate time to prepare."
If Congress does not do something, both Social Security and Medicare will be unable to cover all of the promised benefits. Retirees could receive automatic benefit cuts without Social Security funding.
The good news is that Social Security’s disability program will remain solvent through 2052.
"We remain committed to further bolstering the programs' finances, which will benefit from the long-term growth we will see as a result of the Administration's economic policies," said Treasury Secretary Steven Mnuchin.
To fix the issue, payroll taxes would need to be increased 0.91 percentage points or there would need to be a 19% cut in spending.
Social Security and Medicare together account for 45% of the federal budget.
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