Mon April 23, 2012
How Long Will Social Security Last?
Originally published on Mon April 23, 2012 6:39 pm
ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, HOST:
And I'm Melissa Block. The Social Security Trust Fund is being squeezed. It's now projected that the trust will no longer be able to fully fund benefits starting in 2033. That's more than two decades from now, but the new depletion date, as it's called, is three years earlier than last year's projections.
As NPR's Yuki Noguchi reports, trustees of both the Social Security and Medicare trust funds urged quick bipartisan action today to keep the programs viable.
YUKI NOGUCHI, BYLINE: The outlook for Social Security has worsened. It posted one of its biggest setbacks in funding projections in the history of these trustee reports. Treasury Secretary Timothy Geithner is, by law, the managing trustee of the Social Security and Medicare trust funds. He presented the report at a press conference today.
SECRETARY TIMOTHY GEITHNER: What these reports also reinforce is that we must take steps to keep these programs whole for the future. Pressures on these programs are mounting and Americans are living longer and the number of retirees is growing.
NOGUCHI: A host of changes worsened the outlook for the Social Security Fund. There was a larger than expected cost of living adjustment and there were changes to how much Americans are expected to work, which, in turn, affects the amount of projected payroll tax revenue which pays into the fund.
Charles Blahous is another trustee who urged swift congressional action to extend the life of the fund.
CHARLES BLAHOUS: Our window for dealing with it without substantially disruptive consequences is closing fairly rapidly. In 2033, as has been said, we would have enough revenue coming in to pay 75 percent of scheduled benefits or the payroll tax would have to be raised from 12.4 percent to 16.7 percent.
NOGUCHI: Blahous said reforming Social Security will require some difficult trade-offs and emphasized that those trade-offs are likely to become more difficult with every passing year. He urged Congress to act quicker than the last time there was a major overhaul of the Social Security program.
BLAHOUS: The shortfalls ahead are much larger now than to be readily corrected at the last minute, as was done in 1983, so bipartisan action needs to be responsible, decisive and prompt.
NOGUCHI: In recent years, it's the Medicare Trust Fund that's shown more dramatic changes in funding projections because of rapidly escalating health care costs. But this year, Medicare projections didn't change substantially. The trust remains fully funded until 2024.
Although President Obama's Affordable Care Act faces challenges in the Supreme Court and potentially from opponents on Capitol Hill, Health and Human Services secretary Kathleen Sebelius credited the law with extending the financial viability of the Medicare Fund.
SECRETARY KATHLEEN SEBELIUS: Without the health care law, the Hospital Insurance Trust Fund would be exhausted in 2016, just four years from now. But as a result of the law, we've added another eight years to its life.
NOGUCHI: Sebelius added that the aging of the population and the projected increases in health care costs also mean additional cuts are still necessary to extend the Medicare Fund further.
Response to the trustees' report was swift. Some called for reforms that would cut some Social Security benefits. Others who opposed those cuts called for increases in taxes paid by high income workers to help shore up the fund.
Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.