Long-Term Health of Social Security/Medicare is Worse
March 18, 2003
Although this year's Social Security Administration's annual report shows slightly better short-term news for the nation's retirement and health programs for seniors, the long-term prospects are deteriorating rapidly, say experts from the National Center for Policy Analysis (NCPA.)
According to the NCPA's analysis of the trustees' report released yesterday, revenues from the payroll tax that currently support Social Security and Medicare will be insufficient to pay benefits within the next 10 years. At that time, the obligations denoted by the programs' Trust Funds will require a shift in tax dollars from other areas of the budget at an accelerating rate. The NCPA pointed to a few key dates:
Today: Funds collected for Social Security and Medicare Part A and B are in excess to what is needed to provide benefits. This surplus is equal 2 percent of all federal income tax collections.
- 2008: The date when the funds will no longer be sufficient and general revenue transfers will be needed to meet the programs' obligations.
- 2013: 5 percent of all federal income tax receipts will be needed to maintain promised benefits.
- 2020: 17 percent of all federal income tax receipts will be needed to maintain promised benefits.
- 2030: 36 percent of all federal income tax receipts will be needed to maintain the status quo.
- 2040: Two years before the "Social Security Trust Fund" is exhausted under current estimates, these programs will require 47 percent, or nearly half, of all federal income tax receipts.
"Just like anyone planning for retirement, policy makers should think long-term when discussing the health of Social Security," said Matt Moore, Social Security policy analyst with the NCPA. "This year's trustees report shows that attempting to maintain the status quo is going to be difficult at best, disastrous at worst."
Source: Sean Tuffnell, "Long-Term Health of Social Security/Medicare is Worse," Media Advisory, March 17, 2003, National Center for Policy Analysis; see also "2003 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds," March 17, 2003.
For Trustees' report http://www.ssa.gov/OACT/TR/TR03/
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