http://www.bloomberg.com/apps/news?pid=20601087&sid=amTqW1OAHXl8&refer=worldwide



By Alison Fitzgerald

May 12 (Bloomberg) -- The financial health of Social Security and Medicare, the two main safety nets for American retirees and the elderly, is declining as the recession cuts payroll-tax contributions just as the baby-boom generation begins to retire.

The Social Security trust fund will run out of assets in 2037, four years sooner than previously forecast, the trustees said today. Spending on Medicare, the health insurance plan for the elderly, will reach a legal limit by 2014, the same year predicted in 2008, the trustees’ report said.

The deteriorating position of the two funds puts pressure on Congress and President Barack Obama to come up with ways to cut costs and boost revenue for both. Obama yesterday said fixing the nation’s health-care system is an “imperative for America’s economic future.”

“After we have passed health-care reform that puts our nation on a path to lower growth in health-care costs and expanded affordable coverage, this president will work to build a bipartisan consensus to ensure the long-term solvency of Social Security,” Treasury Secretary Timothy Geithner said today in a statement.

The trustees’ annual report also estimated that Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago.

Funding Medicare

The report issued today is the third consecutive one in which Medicare’s trustees have pulled the so-called trigger, a law mandating that the president introduce legislation the following year to protect the program’s financing. President George W. Bush last year proposed that wealthier seniors pay higher premiums for Medicare’s prescription-drug benefit, which Democrats in Congress dismissed as insufficient.

Spending on Social Security is expected to exceed revenues in 2016, one year earlier than last year’s forecast, the report said. The trust fund will need an additional $5.3 trillion over the next 75 years to meet all scheduled benefits, the trustees said. The retirement-assistance program can continue to pay full benefits for about 30 years, the report said.

The government retirement system faces a cash shortfall because the number of retirees eligible for benefits will almost double to 79.5 million in 2045 from 40.5 million this year.

Bush Failed

Bush and then-Treasury Secretary John Snow campaigned across the nation for partial privatization of Social Security in 2005, shelving the idea after encountering widespread opposition from Congress and the public.

Obama “explicitly rejects the notion that Social Security is untouchable politically and instead believes there is opportunity for a new consensus on Social Security reform,” Geithner said in his statement.

The administration yesterday raised its estimate of the budget deficit this year to a record $1.84 trillion, up 5 percent from the February estimate, and to $1.26 trillion next year, up 7.4 percent. Next year’s budget will end up at $3.59 trillion, the White House said, compared with the $3.55 trillion it estimated previously.

“The Social Security and Medicare trustees’ report confirms what we already knew: Our nation cannot afford to continue this reckless borrowing and spending spree,” House Republican Leader John Boehner said in a statement. Obama’s policies “are putting our kids and grandkids deeper in that hole, and deeper in debt to China and the Middle East.”

U.S. Recession

Since the recession started in December 2007, the world’s largest economy has lost 5.7 million jobs, the most of any economic downturn since the Great Depression. The country’s jobless rate of 8.9 percent in April was the highest since September 1983.

“The leading cause for any change in the lifespan of the Social Security or Medicaid trust funds is change in our economy, in a recession,” White House Spokesman Robert Gibbs said today before the reports were released.

The best way to address the problem is to “create jobs to get our economy moving again, to lay the foundation for long- term economic growth, and through that economic growth we’ll see a stronger position for both Medicare and Social Security,” Gibbs said.

http://washingtontimes.com/news/2009/may/12/annual-checkup-social-security-and-medicare/print/

Tuesday, May 12, 2009
Social Security, Medicare finances worsen

UPDATED:

The continuing U.S. recession has worsened the financial health of the government's two biggest benefit programs, figures released Tuesday showed.

Medicare, the main medical program for the elderly and disabled, will even pay out more in benefits this year than the government collects in taxes for it.

The findings released by the trustees of Medicare and Social Security, the government's pension system begun during the Great Depression of the 1930s, is a blow to President Obama's plans for a major reconfiguration of the health-care-delivery system in the country. A major part of his campaign last year was to bring almost universal government-run health care to the United States, one of the few developed countries whose medical systems are based on private medicine.

Both Social Security and Medicare are financed through payroll contributions from workers and employers.

The findings in the trustees' annual checkup on the programs did not come as a surprise. Private economists had been predicting that the dates the programs would begin to pay out more than they take in and that the dates the trust funds would be insolvent would occur sooner, given the economic recession.

The deep recession, the worst in decades, has resulted in a loss of 5.7 million jobs since it began in December 2007. The unemployment rate hit a 25-year high of 8.9 percent in April.

Fewer people working means less being paid into the trust funds for the benefits programs.

The trustees said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year. Its giant trust fund will be depleted by 2037, four years sooner, they said.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year's report.

Treasury Secretary Timothy F. Geithner, head of the trustees group, said the new reports were reminders that "the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."

For decades, almost every president has tried to tackle the approaching certainty that the hugely popular programs were running out of money. Even before the current recession, it was obvious that the aging of the baby boomer generation, the mass of people born between 1946 and 1964, would put too great a burden on the programs because of retirement needs and old-age medical problems.

Mr. Geithner said Mr. Obama was committed to working with Congress to find ways to control runaway growth in both public and private health-care expenditures. Major health-care providers promised the president on Monday to trim costs by $2 trillion over the next decade.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the nonpartisan CBO projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees' report projected that Social Security's annual surpluses would "fall sharply this year," then remain at a reduced level in 2010 and be lower in the following years than last year's projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased retirement demands of the wave of 78 million baby boomers.

That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year's report.

At that point, annual Social Security taxes collected would be enough to pay for three-fourths of current benefits through 2083. To tap the trust fund, the government would have to increase borrowing or raise taxes because Social Security bonds exist only as bookkeeping entries.

While the government is obligated to redeem the bonds, it already has spent the excess Social Security collections over the years to fund general government operations, providing the trust funds with IOUs.

While the smaller surpluses that will begin this year will not have any impact on Social Security benefit payments, the government will need to borrow more at a time when the federal deficit already is exploding because of the recession and the billions of dollars being spent to prop up a shaky banking system.

i had thought months ago, about the republicans in a few years past, wanted to have ppl rather than put their money toward social security into the social secutity fund as now but yall remember they wanted u to be able to put it in the stock market, mainly the younger ppl , but i bet now since the stock market took the big hit, that idea is dead,its just to risky . as ppl almost and indeed in some cases panic,, there are many ways to raise more money for the social security fund, younger ppl will maybe work to an older age as ppl live longer,, which has been discussed already, raise the amount that u and what ur employer pays, lower the amount u make to where u get to stop getting cut for social security. none of these are popular things, but i could handle being cut more to insure my children have it in there future, it will be healthy as is till an age that i will not be here lol.,but if the economy get into a boom time as the economy has always ran in cycles, the social security fund could grow. they have made changes in the past, like i will have to work till 66 not 65 for full benefits, but u still can get on medicare at 65 even if ur in the 66 year old bracket.. so trust me, i may retire at say 64 and some months, pay cobra or anything that passes in healhcare then get on medicare at 65 and take the small hit for one year early, if i retired at 62 now i would get 75 percent of the full amount , before the 65 year old retirees got 80 percent at 62, i had a neighbor who went to one of the best colleges here,and worked for social security all his life, , and he handled cases all the time, told me the best way if u can handle it is to take the 62 year option and told me how long u had to live to start loosing money over working to the full paid age, that most ppl die before they get to the point of loosing the early money u would draw starting at 62. he just stated statistics showed the 62 year retirement age was the best unless ur one of those ppl that live to a real old age, i feel lucky to be here now lmao,, take care

yes, it will pick back up an survive(SS/Medicare, so much fear being pushed at us by the Republicans, is ridiculous, they should have been busy doing something the last what 30 years they controlled the house/Senate

No,no, and no. 1.The Bush plan would have allowed workers to invest a grand total of 5% of their Fica deduction (not their pay) in any way they chose;one of which could have been stocks & bonds. Hysterical Democratic demagoguery squelched THAT. 2.As my brother appproached 62,he got a letter from SSA quoting his estimated benefit schedule. Almost immediately thereafter,he got another letter informing him of the new retirement age rquirements. He would now have to work a year longer to get the same check. He was in a position to retire at 62 as planned and did so,buit he now receives about $170/mo. LESS than he would have. Call it what they will; it was a cut in benefits. 3.This should leave no doubt that Congress will cut benefits further at the drop of a hat,especially if we are to provide free healthcare to any and everyone. As it is,a person who never worked a day in his/her life gets MUCH better healthcare benefits under Medicaid than the Medicare coverage I paid for. As I told Tyler,the Dems can provide all the free programs to everybody all they want to,but wait until I'm dead; I WORKED AND PAID FOR THOSE BENEFITS.

meemoon wrote: I WORKED AND PAID FOR THOSE BENEFITS.

i understood the amount would be our of what u are cut for social security and not ur pay, i did not know u draw disability for a car wreck i always assumed it was because of i think u said u had polio at some point in ur lifetime, take care

u know how u just get a feeling in ur gut, well i get one about marc, i have the feeling he will be one of those 94 year old les paul, kinda dead ppl, and suck social security dry, LMAO

I hope he is around a very long time...

gypsy wrote:yes, it will pick back up an survive(SS/Medicare, so much fear being pushed at us by the Republicans, is ridiculous, they should have been busy doing something the last what 30 years they controlled the house/Senate

If you can ever get past your paranoia of Republicans and open your eyes that it takes both parties to make decisions , you might be able to see thru the fogged windows this administration is putting up. The answer is not in a government run program where they have the power to say who can and who cannot get health care or where or when. Obama stated himself there will be limitations and lines drawn. I'm not one who wants to be dictated to about what kind of extended care I can receive.

well I disagree, it would be better than being run by Mafia(insurance)companies with your politicians heavily into paybacks from the insurance companies. guess what most are republicans.a few Democrats. as i said for 30 plus years the republicans have had control of the house/senate this crash all started with Reaganomics,I liked the man but didn't care much for his policies
an it is funny to me, that Obama has only been in office for nine months and you expect him to fix something that has been broke for a long time like Health care,it has not been reformed updated for 70 years.even when hillary tried republicans fought it~. yes the republicans have a fear tactic going an they want Obama to fail,that is something i don't understand not all republicans(of Course ), but a lot of them,the party is in the sewer an they can't seem to crawl out..I also think some democrats are not doing enough either

Once again your paranoia of Republicans shows thru. Obama is trying to breeze an incomplete plan and wanting to fill in the blanks at a later date...That is financial suicide for this country and certainly is a huge black-eye against him. This country does not trust the administration and their flashy arrorgant ways, his numbers are showing this , the people are speaking out in droves.

no paranoia, facts or facts,you see it on tv an read it everyday..
I don't know what Obama wants the republicans backing they have enough Democrats to pass it~ if they will work togeter.
we all have different views, concepts an i see you voice views against democrats~ so i guess that is just how it goes~r

I will be the first to admit the Repubs dropped the ball and now the Dems are following the same pattern but with horrendous spending which will put the American people repaying for a life time of many. For what ? Clunkers ? Wallstreet CEO's ...There are alot of great sounding plans for all the stimulus money but very little action. Clunkers was utterly ridiculous, with millions of people with no vehicle and they destroy these how friggin stupid can it get. Give them to familys with no transportation to seek work....Very porely thought out.
You refered to Mafia insurance could you clarify what and who you were refering to.
Your state had an unemployment rate of 11% last month , where is the stimulas helping you ?

We have all kinds of construction going on road/highways,new CVS, NEW bank, New dollar stores . our son in laws machine shops business picked up because companies he builds air compressors for centec an other companies who got stimulus an they could afford to up their business. I see a very big turn around here but it needs to go farther, an most of that unemployment here was from the bush years.. I think it went up 2% since Obama but the disaster was already done..before that. I think the Clunkers was a good idea got the polluters/dangerous vehicles, off the road an caused a stimulus in the buying cars/vehicles.