For immediate release: For more information:
May 6, 2024 Christopher Colligan
703-894-6222/703-517-0378
WASHINGTON – With today’s release of the annual Social Security and Medicare Trustees’ Reports confirming that both programs are facing near-term insolvency, The Concord Coalition called for dedicated 2024 candidate debates on how to deal with this urgent problem.
“Debates are a valuable opportunity for voters to hear and assess the candidates’ ideas on how to address the nation’s major challenges. While many such challenges exist, the future of Social Security and Medicare deserves special focus because the retirement security and healthcare for millions of Americans would be severely damaged by a failure to act. Moreover, because of their size and projected growth, the future of these programs also affects the allocation of federal budgetary resources, the appropriate level of taxation, and the long-term growth of the economy,” said Concord Coalition Executive Director Bob Bixby.
The Social Security and Medicare trustees warn that absent corrective actions, the finances of these two critically important programs will rapidly deteriorate. Both programs are already running annual cash shortfalls, which increase pressures on the overall federal budget.
The combined Social Security trust funds (OASDI) are facing insolvency by 2035. Doing nothing would result in an across the board benefit cut of 17 percent. Medicare Part A is facing trust fund insolvency by 2036. Doing nothing would require a 11 percent cut in provider payments jeopardizing access to healthcare services.
To illustrate the magnitude of the Social Security challenge, the trustees estimate that one of three things must happen to keep the program solvent over the next 75 years: (1) dedicated revenues would have to increase by an amount equal to an immediate and permanent payroll tax increase of 3.33 percentage points — from 12.4 percent to 15.73 percent, a (2) scheduled benefits would have to be immediately and permanently reduced for all current and future beneficiaries by 20.8 percent, or (3) a combination of the two.
The trustees further note that, “If actions are deferred for several years, the changes necessary to maintain Social Security solvency through 2098 become concentrated on fewer years and fewer generations.”
“The trustees’ warnings are all the more alarming because the nation is not in a position of current or projected fiscal strength. Sudden and substantial benefit cuts await beneficiaries in 12 years or less — well within the lifetimes of many current beneficiaries — if lawmakers fail to act. Solutions must be found that are fiscally and generationally responsible,” Bixby added.
As a budgetary matter, it is important to note that Social Security and Medicare do not “pay for themselves.” The trustees’ reports confirm that Social Security and Medicare Part A will experience growing cash deficits in the future as they pay out more than they receive from their dedicated resources.
General federal revenues also support Medicare Part B, which provides various medical services, and Medicare Part D, which helps pay for prescription drugs. By design, the premiums that older Americans pay for these elements of Medicare cover only about 25 percent of their costs. According to the trustees’ report, Social Security and Medicare had a net draw on the budget of $534 billion in 2023. This consisted of $88 billion for Social Security and $446 billion for Medicare.
“If none of this matters to the people who seek federal office in 2024, the time to find out about it is now when voters can assess the candidates’ positions and make informed judgments. Debates in the House, Senate, and presidential campaigns would shed light on whether the candidates have a firm understanding of the challenges facing Social Security and Medicare and whether their campaign promises add up. Voters should not have to wait until January of 2025 to find out whether candidates endorse the Do Nothing Plan,” Bixby said.
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The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Facebook @ConcordCoalition and on Twitter/X: @ConcordC
