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Social Security Won't Be Able To Give Full Benefits By 2035, Says Report

Social Security Won't Be Able To Give Full Benefits By 2035, Says Report

The report says that payments to beneficiaries would have to be cut by 25 percent starting in 2035 to keep the program solvent.

The Social Security retirement program will be unable to pay full benefits by 2035, says a report released on Monday, 22 April, by the Board of Trustees and the Public Trustee Positions of the Social Security & Medicare Trust Funds. While this doesn't mean that retirees will no longer get any payment in 16 years; it does, however, mean that they will only receive three-quarters of what they are entitled to. Unless the Congress acts fast, the report says that payments to beneficiaries would have to be cut by 25 percent starting in 2035 to keep the program solvent.

Given the 2017 Republican tax cuts, the federal government's deficit has grown. Therefore, despite the strong economy, the program's money issues haven't been solved.



 

Currently, the program has roughly $3 trillion in reserves. As per the report, the government will have to tap into those reserves beginning in 2020, when the costs of the program will begin exceeding the income (happening for the first time since 1982) it receives from taxes, and continue that way through 2093. According to The Hill, this is a tiny improvement as compared to last year's report which said the reserves would be depleted by 2034. 

The trust fund for Medicare, which pays for hospital care, will run out of money by 2026. This prediction is the same as last year's report. CNN says Medicare's overall costs are expected to rise to 6.5 percent of the economy by 2038, up from 3.7 percent in 2018.

The report suggests that this increase in costs will be due to a large Baby Boomers generation retiring. The number of 65 or older Americans is expected to grow by more than a third between now and 2040, according to left-leaning Center on Budget and Policy Priorities. This will increase the volume and intensity of health care services required. This is expected to increase Social Security's expenditure from nearly 5% of the economy to about 6% in 20 years.



 

Post-2026, Medicare will not be able to cover all of the benefits. The report projects that the part of the fund which covers hospital and nursing home costs for seniors (Part A of the program) will be depleted by 2026. But the trust funds for Part B --- doctors' visits and outpatient services and Part D --- prescription drugs coverage, will continue unaffected. The unaffected parts of the program are paid for by enrollees' premiums, which covers about a quarter of the cost, and money from general federal revenue

The program has become a central focus of the 2020 presidential campaign, with Bernie Sander's proposal to expand the program to younger Americans and create a universal health care system called Medicare for All. This has drawn a lot of flak from the Republicans.

"The report also underscores the recklessness of proposals to dramatically expand Medicare, which amount to a total government takeover of healthcare that would eliminate private sector options and actually jeopardize seniors' access to healthcare, while further straining the federal budget," said White House press secretary Sarah Sanders in a statement.

However, there are those who say that lawmakers in Congress should set aside differences and focus on the people's best interests. "Efforts should be taken now and phased in overtime to slow the growth of health costs in Medicare and restore sustainable solvency to Social Security," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "But every day that passes, the problem gets bigger and the solutions become more difficult to implement."

As per the report, at the end of 2018, the Social Security program provided benefits to about 63 million people, which included not just retired workers, but also dependents and survivors, as well as disabled workers and their dependents.

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