Social Security, Medicare trust funds on shorter string
By ASSOCIATED PRESS
Published May 2, 2006
WASHINGTON - The trust funds supporting the government's two biggest benefit programs will be exhausted a little sooner than previously thought.
The trust fund for Social Security will be completely exhausted in 2040, one year earlier than previously estimated, while the trust fund for Medicare will be exhausted in 2018, two years earlier than the estimate given last year, the trustees of the two programs said Monday.
Their annual report said the problems facing Medicare, the government's huge health care program for the elderly, were far more serious than the problems facing Social Security, because of the skyrocketing costs for health care.
At the end of last year, 40.1-million Americans were receiving Social Security pension and survivors' benefits, 8.3-million people were getting disability benefits and 42.5-million Americans were getting Medicare benefits.
The trustees, who include the head of the Social Security Administration and three members of President Bush's Cabinet, painted a sober assessment of the health of the two programs in advance of the looming retirements of 78-million baby boomers.
They stated that the projected long-term growth rates for both Social Security and Medicare are not "sustainable under current financing arrangements."
The trust funds contain the equivalent of government IOUs. To raise the actual cash to meet obligations, the government must either borrow more money from the public by issuing marketable Treasury securities, raise taxes or cut spending in other programs.
Bush tried last year to overhaul Social Security with the introduction of private investment accounts for younger workers, but the idea went nowhere in Congress. Democrats attacked the Bush program as a hidden effort to cut future benefits.
In this year's State of the Union address, Bush asked Congress to create a bipartisan commission to study entitlement reform. But even this modest proposal has not generated much interest, in part because lawmakers do not want to address entitlement reforms in a congressional election year.
Treasury Secretary John Snow, the chairman of the trustees group, said the new report depicted "a looming fiscal crisis as the baby boom generation moves into retirement" and he urged Congress to move forward.
But Democrats charged that the administration was using the trustees reports to try to create an air of crisis to make radical changes to the two benefit programs.
"There is no crisis," said Rep. Pete Stark, D-Calif. "There remains plenty of time to mend rather than end Medicare."