Jim thank you for keeping this place going, financially too, and taking the hits for free speech platforms.
This means all the Americans who have paid into the Social Security system via the payroll tax (employers and employees each pay 6.2 percent of wages, while the self-employed pay 12.4 percent) will not receive scheduled benefits after 2035. Either benefits will have to be slashed or the payroll tax will need to be increased. Either way, this is bad news for those of us who have been forced to pay into a trust fund that will be insolvent in 13 years.
Unfortunately, things are even worse when it comes to the status of Medicare.
According to the report,
“The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits.”
In six years, Medicare will not be able to pay its bills. Like Social Security, this means either the Medicare tax (currently 1.45 percent for employers and 1.45 percent for employees, or 2.9 percent for self-employed) will need to be raised or benefits will have to be drastically reduced.
On the bright side, there still is ample time for Congress to address these shortfalls with common sense reforms before it becomes too late. Yes, Congress has kept its head in the sand far too long while these programs have been on an unsustainable path. But, it is not too late.
For starters, Congress should shore up both programs over the short-term so that current payees do not get the short of the end of the stick via reduced payouts after they faithfully paid into the system.
Over the long-term, Congress should allow those who do not wish to participate in Social Security or Medicare the option to enroll in alternative plans, such as a privatized version of Social Security.
For many years, Congress has been aware of the inevitable insolvency of these programs. Yet, for far too long, Congress has chosen to do nothing about it. In fact, Congress has made the problem worse by constantly calling for more benefits while raiding these trust funds to cover its current profligate spending.
No wonder Congress’ approval rating is hovering near an abysmally low 20 percent.
Chris Talgo (ctalgo@heartland.org) is senior editor at The Heartland Institute.
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