Today, the Social Security and Medicare Trustees released their annual reports on the financial status of the two programs. The Trustees now project that Social Security will face a deficit of $41 billion this year before returning to surplus in 2012. In 2015, deficits will return and will continue to rise thereafter, reaching 1.1 percent of taxable payroll in 2020 and 3.2 percent by 2030, before depleting the trust fund entirely by 2037. The graph below shows outlays and revenues of the Social Security program projected for future years, with revenues staying flat and outlays increasing significantly.
The Trustees’ Report shows the projected cost outlook for both Social Security and Medicare as worse than prior estimates, with combined costs amounting to 8.5 percent of GDP in 2010 and increasing to more than 17 percent by 2083. To put this number in perspective, total federal receipts in 2008 amounted to almost exactly the same 17 percent figure (and revenues over the past few years have been lower). Over the next several decades, the report asserts, “both Medicare and Social Security costs are projected to grow substantially faster than the economy, but tax income to the HI and OASDI trust funds will not.”
As soon as possible, and before the system dips into continual deficit operation, reforms are needed to ensure the program’s solvency for future generations.