Chuck Blahous and Robert Reischauer, the two independent trustees of the Social Security and Medicare Trust Fund, had a sober warning Friday: act quickly or the nation's two most popular entitlements are in serious danger.
“The earlier we act to deal with these problems, the better off we're gonna be, certainly better off the vulnerable populations are gonna be,” said Blahous, referring to low-income seniors and those already receiving benefits.
The Medicare hospital trust fund will be unable to pay promised benefits in 2024, five years earlier than previously thought.
“The fact that we are now looking at the future that involves nothing but years in which the program costs more than the income flowing into it is a new development,” Reischauer says.
Additionally, the Social Security trust fund will be exhausted in 2036 and under current law, seniors will face a 23 percent across-the-board cut in benefits. If lawmakers wait until then, the magnitude of the problem is exponentially bigger.
“In 2036, if you wanted all benefit constraints to apply only prospectively, you wouldn't have a system in balance even if 100 percent of those benefits for new retirees were cut off,” Blahous said.
But some minimize the threat. The president's budget director told Fox News that even when the trust funds run out, both Social Security and Medicare would still have some income.
Senate Majority Leader Harry Reid went much further, saying there's no crisis in Social Security and that we could wait until 2030 or later to fix it.
The trustees see it differently.
“In 2036, if we were to delay a resolution of the problem until that date, we would have basically -- and I would go so far to say -- almost insoluble problem,” Blahous said.
Some members of Congress favor urgent action as well. On Friday, independent Sen. Joe Lieberman of Connecticut wrote an opinion article in the Washington Post making the case for raising the Medicare age from 65 to 67 ... and raising co-pays and premiums.
“Bottom line, Medicare is hurtling toward its demise -- our government is approaching a cataclysmic fiscal tipping point -- while Washington is busy posturing for the next election,” he wrote.
Younger Americans should worry too, because in 20 years, there'll only be two workers for every retiree, so any tax increases would fall hard on working-age Americans.