Report Warns of Looming Social Security, Medicare Woes

Social Security News – National Legal News May 12, 2009

Washington – The federal government has expressed concern over the issue that Social Security and Medicare funds are heading for insolvency sooner than expected.

According to government reports, Social Security will start giving out more benefits than it collects in taxes in 2016, which will result in depletion of funds by 2037, four years earlier than previously projected. Medicare is also facing problems as trustees said that the fund will be depleted by 2017.

Treasury Secretary and head of trustees Timothy Geithner warned that if these issues are not addressed right away, the government will face bigger and tougher problems in the future. Geithner however stressed that the Obama administration is currently working with Congress to find ways to control both private and public health care expenditures.

The problem was worsened by the recession as unemployment rate has risen. As fewer people have jobs, the amount being paid into the trust funds for Social Security and Medicare was also reduced. According to the trustees report, Social Security has to tap the trust fund in order to make up for the difference between the taxes and the benefits being paid out beginning 2016, resulting in depletion of funds in 2037.

To deal with the problem, experts said, Social Security would have to raise the payroll tax which funds Social Security, removing the cap on income subject to the tax, and cutting benefits or raising the retirement age.

The administration is currently urging Congress to pass a law extending health care coverage to some 50 million Americans who are uninsured.