The annual hair shirt report of Social Security trustees was released on Tuesday. To no one's surprise, our national retirement and health benefit programs are headed for perdition even more quickly than they were last year. Due to the recession, the effective bankruptcy date is 2037 for what's technically called the Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds. That's four years earlier than the forecast in last year's report -- no mean feat in only one year. Program expenses exceed revenues beginning in 2016 -- that's only seven years away, folks -- and all assets are exhausted 21 years later.
And this, sadly, was the good news.
As the trustees said, "Medicare's financial status is much worse." It's hospital insurance component (HI) already pays out more than it takes in, and is busily eating away at its assets as we speak. That tasty meal will be done in only eight years, at which time HI reserves will be zero,nada, zilch. The Medicare Supplementary Medical Insurance (SMI ) Trust Fund operates closer to break even, which is good, because it doesn't have much in the way of assets. The bad news is that the only way it comes close to breaking even is by levying annual increases in rates that are growing faster than the economy and the incomes of the people who rely on the fund to pay for their doctors and prescription drugs.
Of course, you say, we will never allow these programs to become bankrupt. Which is what we have been saying every year for many years. We would never allow the U.S. auto industry to shrivel up and die, either. Right? Or our banks. Yet, this train wreck is still headed our way, and our ability to deal with it has been made ever so much harder by what looks like the worst economic downturn in 80 years.
So, I'm sure you are as comforted as I am by the 2003 law that requires especially dire Medicare news to trigger a warning by the trustees. "The warning requires the President to respond by submitting proposed legislation within 15 days of the next budget submission to address the problem," the trustee's summary report says, "and for Congress to consider the proposal on an expedited basis."
This is the fourth consecutive year the warning has been triggered.
[See Social Security Merits Support, Not Disdain.]