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An annual report from Social Security trustees will highlight those problems when it is released Friday.
The report will show Medicare in worse shape than Social Security because of rising health care costs. But both programs face insolvency unless Congress acts, the report will say.
The trustees reported last year Medicare trust funds will run out by 2029 and Social Security will be flat broke by 2037. Projections won’t improve after another year of high unemployment and lagging tax receipts.
“This is important news for programs that serve as critical lifelines for millions of older Americans and demonstrate the need for our elected leaders to strengthen — not undermine — these pillars of financial and health security,” John Rother, AARP’s executive vice president, tells The Associated Press.
Democrats and Republicans agree Medicare must be addressed soon, but the consensus ends there.
Reports the AP:
Most Republicans and some Democrats in Congress have said they won’t vote to increase the government’s ability to borrow without significant spending cuts. The government is expected to reach its borrowing limit of $14.3 trillion in the next few days. Treasury Secretary Timothy Geithner says steps are being taken to delay until August what would be an unprecedented default on the debt.
Changes to Medicare, the government health insurance program for older Americans, could be part of an agreement to increase the debt ceiling, but Social Security appears to be off the table.
Many Democrats, including Senate Majority Leader Harry Reid, D-Nev., have been adamant that they will not support cuts in Social Security benefits, even if they target future retirees. Senate Republican leader Mitch McConnell acknowledged that changes to Social Security won’t be part of any agreement.
“I would love for Social Security to be a part of it,” McConnell told reporters Thursday. “The president can speak for himself, but I think he’s not interested in doing Social Security without raising taxes. We don’t think that’s necessary.”
Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said Social Security is not in crisis.
“It is a long-term issue,” Baucus said. “It is an issue that should be addressed sooner, rather than later, to give workers time to plan for any changes. But the current situation does not necessitate rushed or severe action.”
Democrats and Republicans are also sparring over how to fix Medicare. House Republicans have passed a plan that would replace Medicare with a voucher-like payment system for future retirees, but GOP leaders in Congress have acknowledged that the plan is unlikely to pass.
House Democratic leader Nancy Pelosi says some Republicans are now “trying to run away from the vote” but that Democrats stand ready to remind voters.
Nearly 55 million retirees, disabled people and children who have lost parents receive Social Security benefits, which average $1,077.22. More than 46 million people are covered by Medicare.