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Social Security says system's costs will exceed income this year

06 June 2018

Costs to the fund will also be slightly higher than last year's estimates, "mostly due to higher-than-expected spending in 2017, legislation that increased hospital spending and higher Medicare Advantage payments", the trust fund report said.

The report by the trustees stressed that they've said before that the fund in trouble is not adequately financed over the next 10 years. The total annual cost of the OASDI program is projected to exceed total annual income in 2018 for the first time since 1982 and to remain higher throughout the 75-year projection period. About 23 percent of older married couples rely on Social Security as their main source of income, according to the program.

After 2034, the trustees say Social Security will be able to pay out about three-quarters of the benefits it owes to recipients.

For Medicare, insolvency would mean that hospitals, nursing homes and other providers of medical care would be paid only part of their agreed-upon fees.

The Cabinet secretaries for Treasury, Health and Human Services, and Labor usually participate in the annual release of the report on Social Security and Medicare, along with the Social Security commissioner, and take questions from reporters. The public trustee posts are now unfilled. And the trustees now say that program is going to be insolvent in 2026 - or roughly the same time as we are from the passage of Obamacare.

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Additionally, President Trump's decision to end a program offering young undocumented immigrants reprieve from deportation while allowing them to work reduced anticipated tax revenue into the Social Security program.

Democrats, meanwhile, want to extend the social safety net by spending more on health care and education.

But federal deficits keep rising, and the recent Republican tax-cut bill is expected to add to the debt.

"The continued delay in enacting legislative repairs renders effective solutions more elusive and poses particular risks to economically vulnerable populations", Charles Blahous and Robert Reischauer, both former public trustees of the Social Security and Medicare Trust Funds, wrote in a joint report published by the Bipartisan Policy Center in advance of the trustees report.

Most Social Security reform proposals call for a combination of increasing payroll taxes and cutting benefits, including recommendations to raise the full retirement age or scale back on inflation protections. That money is invested in special government securities, which also collect interest.

Social Security says system's costs will exceed income this year