For the first time in 39 years, Social Security payments made to Americans withdrawn this year and each year thereafter will exceed the tax revenue that will come to the federal government as a result of the economic recession of the coronavirus pandemic, according to a new government report.
Social Security payments for retired Americans will run out in 2034, a year ahead of schedule, says the 2021 report from the Social Security and Medicare Trust, which oversees both programs. After that, tax revenue will only cover 76% of the planned benefit needs. As for the Social Security Disability Insurance Program, these funds will run out in 2057, eight years earlier than previously planned.
The recession and rising mortality rate due to the COVID-19 pandemic are the main factors driving the previous depletion of funds, according to the report: red flags are added to the pressure for federal lawmakers act as a wave of retired baby boomers and The new pandemic variants are sure to put more pressure on an already stressed system.
The report says last year’s Social Security revenue exceeded costs by $ 11 billion. Excluding interest earned on program trust fund assets, the program deficit is $ 65 billion.
While the lack of funding would seem to point to profit cuts, the non-partisan Concord Coalition estimated Wednesday that Social Security could begin liquidating trust fund bonds to cover its obligations in the absence of congressional action.
“Sudden and substantial benefit cuts await Medicare and Social Security beneficiaries in less than 15 years, even in the lives of many current recipients, as long as lawmakers continue to ignore the warning signs in these reports “Solutions must be found fiscally and generationally responsible,” said Robert Bixby, the coalition ‘s executive director.
While there has been no movement on Capitol Hill or the Biden White House to address the report’s findings, Treasury Secretary Janet Yellen affirmed the administration’s commitment to maintaining some of the programs in most important social welfare in the nation.
“Having strong Social Security and Medicare programs is essential to ensuring a safe retirement for all Americans, especially for our most vulnerable populations,” Yellen said in a statement Tuesday. “The Biden-Harris Administration is committed to safeguarding these programs and ensuring that they continue to provide financial security and health care to older Americans.”
Senator Mike Crapo, R-Idaho, a member of the Senate Finance Committee ranking, recognized the importance of bipartisan collaboration in extending benefits to Americans. But he criticized Democrats for not thinking long-term about keeping Social Security and Medicare funds green.
“While bipartisan efforts are needed to make the changes needed to meet the long-term financial challenges of Medicare and Social Security, most Democrats only want to expand the promises of benefits without generating solvency from the sustainable trust fund,” he said. say Crapo in a statement.
As for Medicare, the report indicated that the depletion of its funds in 2026 remains unchanged.
Senate Finance Committee Chair Ron Wyden D-Ore issued a statement Tuesday saying Congress must work “hand in hand with President Biden” to ensure the continuity of Social Security and Medicare.
When Social Security funds are exhausted, “workers will have a 25% reduction in benefits, although they will still contribute to Social Security with each paycheck,” Wyden said in the statement. “While the projected depletion of the Medicare trust fund remains unchanged from last year’s report, it provides a cold comfort to the millions of Americans who rely on the Medicare program for their health care. “.
The report says both Social Security and Medicare will soon face “long-term funding deficits.” The COVID-19 pandemic and the accompanying recession significantly affected the funds of both programs, with employment, earnings, interest rates and GDP falling substantially last year.
On average, 65 million Americans receive Social Security benefits each month, and a rapidly growing retired population, coupled with a declining birth rate, will only increase program costs.
In 2034, adults over the age of 65 are expected to outnumber the population under the age of 18 for the first time in the country’s history, according to data from the Census Bureau.
Trish Turner of ABC News contributed to this report.