Bleaker outlook for Social Security, Medicare

This Feb. 2005 file photo shows trays of printed social security checks waiting to be mailed from the U.S. Treasury. / AP Photo/Bradly C. Bower

Last Updated 2:02 p.m. ET

The bad economy has shortened the life of the trust funds that support Social Security and Medicare, the nation's two biggest benefit programs, the government reported Friday.

The annual checkup said that the Medicare hospital insurance fund will now be exhausted in 2024, five years earlier than last year's estimate. The new report says that the Social Security trust fund will be exhausted in 2036, one year earlier than before.

The trustees for the funds said in their annual report that the worsening financial picture emphasized the need for Congress to make changes to avoid disruptive consequences in the future for millions of people who depend on health and pension benefits.

Treasury Secretary Timothy Geithner, who chairs the trustee's panel, said the new report underscored "the need to act sooner rather than later to make reforms to our entitlement programs. ... We should not wait for the trust funds to be exhausted to make the reforms necessary to protect our current and future retirees."

Social Security: Projected Trust Fund Exhaustion One Year Sooner (Press release)
Summary of 2011 Annual Reports
2011 Medicare Trustees Report (pdf)

The trustees said that they moved the target date for the Medicare hospital trust fund to be exhausted from 2029 to 2024 because of a weaker economy, which means fewer people working and paying Medicare premiums into the fund, and continued increases in health care costs.

Last year's report had extended the life of the Medicare fund by 12 years to reflect the savings that were included in the massive overhaul of health care that President Barack Obama got Congress to pass in 2010. Without the changes in health care law, the administration said the Medicare trust fund would be exhausted in 2016.

The savings in the health care legislation are still included in the trustees' projections but have been updated to reflect data on the economy and health care costs over the past year.

Many experts believe that the savings included in Obama's health care program will never be achieved because they include deep cuts in payments to doctors that Congress has routinely waived and other cost savings that will be difficult to realize.

The Social Security trust fund was projected to be exhausted in 2036, compared with last year's projection that it would be depleted in 2037.

The trustees said in 2037 the government will be taking in enough in Social Security payroll taxes to pay about three-fourths of existing benefits.

The new report projected that the millions of Social Security recipients would receive a small, 0.7 percent cost of living increase in their benefit checks in 2012. In 2010 and 2011, there were no cost of living increase in the checks because inflation was low.

A 0.7 percent increase would not be seen by many beneficiaries because the extra money would be eaten up by higher insurance premium payments for Medicare. The actual benefit increase will be determined based on the performance of the government's Consumer Price Index. That figure will be released in October.

"I think our members look at Social Security and Medicare, any developments, with a great watchful eye," AARP's Mary Liz Burns told CBS News. "For them they know the importance of these programs and the benefits that they've paid into over their lifetime of work."

Burns said lawmakers on Capitol Hill better get cracking, even as Social Security remains solvent, at least in the short term.

"The trustees reaffirmed the program is financial strong in the short-term," said Burns, "and we know that if we come together with some reasonable solutions, we can be able to strengthen the program for our kids and our grandkids.

"These reports demonstrate the real need for all of our elected leaders on both sides of the aisle to strengthen these critical programs," Burns told CBS News.

American Enterprise Institute resident scholar Andrew Biggs told CBS News that Congress has to implement changes to avoid disruptive consequences for those who depend on health and pension benefits:

"Individuals need to pay more money into the system in terms of taxes, or the programs have to pay less out in benefits," Biggs said.

Democrats and Republicans agree that Medicare must be addressed soon, but the consensus ends there, even as a bipartisan group of lawmakers headed by Vice President Joe Biden is holding talks on ways to tackle the nation's mounting debt.

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 by Monday.

5 Social Security Myths That Have to Go (CBS Moneywatch)
Social Security Strategies: How to Get $90,000 More For Your Spouse (CBS Moneywatch)

Geithner said Friday that Congress should "move as quickly as possible" to raise the borrowing limit. He has told lawmakers that he can take steps to delay until Aug. 2 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 on Thursday that changes to Social Security won't be part of any agreement.

Democrats and Republicans are 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.

Nearly 55 million retirees, disabled people and children who have lost parents receive Social Security benefits, which average $1,077.22 monthly. More than 46 million people are covered by Medicare.

Six trustees oversee Social Security and Medicare, including Geithner, Labor Secretary Hilda Solis, Health and Human Services Secretary Kathleen Sebelius and Social Security Commissioner Michael Astrue.

[mary-miami]

Blue collar workers go to work everyday and live paycheck to paycheck because the minimum wage of $7- hour, is not a living wage. If they are lucky enough, they'll earn $10 an hour. They typically work labor intense jobs; so by the time they reach retirement age their bodies are old, hurting, broken and cannot continue working to keep pace with the younger generations. They have to retire. These workers never earn enough to save any money for the future so what will they live on during the last years of their life? They can't let someone else support them because, some don't have children and some lost the kids to war. They paid their taxes and had federal deductions to their paychecks...they deserve social security and medicare to let them live the last years of their life with dignity. Republicans don't care about the working class or poor because the rightwing believes that they are a superior class and that only the rich should have rights, whereas the workers should sit down and be quiet. The republicans and teaparty want to create a society with just two social classes, the rich and poor. They want to completely destroy the middle class because that is the ladder up from poverty. Conservatives want their servant's child to be a servant also. Add to that the extremist views of the Teaparty...racism, bigotry...and you have the beginning of fascism. Teaparty has been striving to dismantle the Constitution for a long time, because their primary objective is to gain absolute power and create a government where only the wealthy would rule and the rest of the population would be subjected to slave labor...note how the large corporations take their factories to China. China has little regulations, slave workers, no environmental laws, all of which enable the rich CEOs to pocket profits while denying cost of living wage increases to their employees. To begin with the teaparty would eliminate the First Amendment, because that is the basis of a free nation. Having free speech, press, religion, right to peaceful assembly, protest and petition...We have a free country. The only party that truly respects and defends equal rights and opportunities for everyone is the Democrats. I will vote to re-elect President Obama in 2012.

[simpleconservative]

Just a few corrections: Blue collar workers generally choose to use their backs and not their brains at a very early stage in their working lives. It is far too much trouble to advance mentally when they are young and strong. As their bodies break down they realize the mistake but rather than taking personal responsibility they often look for someone to blame. As to whether someone who makes $10.00 per hour or any amount you name can be prosperous, I can tell you from personal experience that my Father in law never made more than $27,000 per year in his entire life and managed to die with an estate worth more than $600,000. Your slams on the tea party and Republicans are juvenile attempts to shift blame for your lack of success. As to the success ladder it is generational and parents who make sure their kids get an education see them climb a rung or more on that ladder. Your comment regarding the tea party striving to dismantle the constitution is the most absurd out of your portfolio of absurd comments. Limited government on a federal level was the intent of the constitution above all other objectives. Democrats work day and night to destroy that objective and grow government. Democrats are the party of government and they do not give a hoot about middle class, upper class, productive class, they are simply focused on the political unproductive class and ensuring their benefits. They could care less whether we have a strong dollar or a strong national defense. The fact that you will vote to re-elect this failed President and support his failed policies gives some validity to those who believe their should be a minimum IQ requirement in order to cast a vote!

[reluctantzealot]

Obama says we should be more like China....

nuff said.

[retm-w]

Social security is a retirement account. Those who are working a full time job and collecting SS need to be cut off until they officially retire. If you want to collect SS and work then it needs to work just like if you take early SS at 62, you can only make $14,000.00 per year any thing over that you are penalized.

[reluctantzealot]

SS is not a retirement account. It is an insurance policy...that is why it is named Social Security Insurance.

A retirement account you own and you can leave in your will to your family. A retirement account you own and you invest and hopefully you get to grow.

SS you don't own and the money is not invested but spent on someone else and you can only hope that the next generation will continue to pay in and support YOU. If they stop, you are screwed.

[credibility2]

A few ways to fix the problem: 1) force all public sector workers to pay into the SS system and banish their private pensions; 2) cease all payments to foreign nationals who have never put into the system but just because they have legal residency here and are of retirement age are automatically qualified to receive the benefits; 3) raise the worker contribution ceiling limit from the current $106,000 to at least $250,000; this would require that payout amounts similarly be adjusted upwards; 4) mandate that one must have participated in paying into the system for at least thirty-five years before they qualify for any payouts, regardless of the circumstances; 5) drop SSI and create a separate entity for disability entitlements, which SS was never meant to accommodate.

[reluctantzealot]

I agree. Do all of the above!

[noloyalisti]

Well duhhhhhh. After the disaster of Reagan, the father of privatization and deregualtion and the awesome crimes of the Bush Crime Family, of course there is a bleak outlook.

This whole thing was set up by the worthless Republicons to set up entitlement and welfare for the rich. These people are communists and reverse Robin Hoods.

[reluctantzealot]

Obama just gave 2 trillion dollars to the rich... Wall Street thanks him.

Open your eyes before you find out that your country has been destroyed while you slept.

[wfw3536]

I do not know why this is a big story. Unless we do something besides Obama do nothing plan both will be a thing of the past. It is too bad he made this a political football, instead of providing the leadership he promised when he ran in 2008. Recently, Paul Ryan suggested some ideas for Medicare and all Obama did was mock and made fun of it. This isn't the type of leadership we need from the president. How sad.

[notreich]

That's right, Sharron Angle, Rep. Paul Ryan and other Tea Party Republicans have already said Social Security and Medicare are dying and so should just be ended -- and then everything will be just fine.

[reluctantzealot]

Yep, everyday is just another big Joke for the POTUS

[noloyalisti]

These morons need to place blame where blame is due on the Republicons. If it was not for the Bushoccio tax cuts for the uber wealthy and the occupations of Iraq and Afghanistan we would HAVE NONE OF THESE SHORT TERM DEFICITS.

Put in a fair taxation system (like have everybody pay the same percentage into Social Security) and cut the military budget in half and we have no more long term deficits either.

[reluctantzealot]

Uh...there were no tax cuts on Medicare taxes. It's the only tax that the rich and poor pay equally. So the answer lies in the mismanagement of yet another government program. Proof postitive for those smart enough to figure it out that government is incapable of running business effectively.

[allenwsmith]

THE SOCIAL SECURITY TRUST FUND IS EMPTY!

The government is now saying that they have only enough money in the trust fund to pay full Social Security benefits until 2036--not 2037 as they previously claimed. THE TRUTH IS THAT SOCIAL SECURITY DOES NOT EVEN HAVE ENOUGH MONEY TO PAY FULL BENEFITS FOR 2011, unless the government borrows money to repay some of the money it has stolen from the trust fund.

After 25 years of Social Security surpluses, that were generated by the 1983 payroll tax hike, Social Security began running annual deficits in 2010. Because of the retirement of the baby boomers, we have reached the point where annual benefit costs exceed the annual payroll tax revenue. That was foreseen in 1983, and the purpose of the payroll tax increase was to generate a quarter-century worth of surpluses that would be saved and invested to build up a large reserve in the trust fund which could be drawn down to supplement the inadequate payroll tax revenue when the boomers retired. The 1983 payroll tax hike has generated $2.6 trillion in surplus revenue that was supposed to be saved and invested in marketable U.S. Treasury bonds. If that had been done, the trust fund would today hold $2.6 trillion in "good-as-gold" marketable Treasuries that could be resold by the S.S. Trustees in the open market in order to raise cash for the payment of benefits. But none of the money was saved or invested in anything. It was all spent for tax cuts, wars, and other government programs. The spent money was replaced with nonmarketable government IOUs which are nothing more than accounting entries that tell us how much Social Security money has been stolen.

On March 16, 2011, Senator Tom Coburn (R-OK) made the following statement during a Senate speech:

"Congresses under both Republican and Democrat control, both Republican and Democrat presidents, presidencies have stolen money from social security and spent it. The money's gone. It's been used for another purpose."

All members of Congress know that what Senator Coburn said was absolutely true. So does President Obamma and Treasury Secretary Tim Geithner. But most Americans don't have a clue that for the past 25 years the government has been using every dollar of the surplus Social Security revenue as general revenue. The $2.6 trillion in surplus revenue has already been spent. It no longer exists. It is gone with the wind! Therefore, the only way that the government can pay full Social Security benefits, in 2011, and in the years ahead, is to raise taxes, cut spending on other programs, or add still more to our skyrocketing national debt. The Social Security Trustees are just playing a silly little game with the American people when they say there is enough money in the trust fund to last until 2036. There in not a dollar's worth of real assets in the trust fund. It has all been spent for other things. I have spent the past ten years of my life, trying to expose the great Social Security theft, but the government does not want the people to know about it. If you are interested in learning more, please visit my website at www.thebiglie.net. Thank you.

Allen W. Smith, Ph.D.
[e-mail]
1-800-840-6812

[GreenGestalt]

This is the result of both letting the rich LOOT the fund and then letting them hoard the money and letting them cheat on taxes. Social Security should be the most stable investment on earth, until man lives beyond 144 years old. But it's been raided by one administration after another. For instance, lots of "Star Wars" defense spending was funding a BILLION to spend a few million for a few scientists to make a design for a "Space Umbrella" or something. Lots of "No-Bid" contracts of Dubya, "Tax Breaks and Subsidies" for exporters of jobs.


The best way to start to fix it is to:


1. Get RID of illegals. (hint; target their employers)
2. END any tax break/non-tariff thing for any overseas trade.
3. Start enforcing "monopoly" laws again. A business should own ONE TV station -OR- ONE radio station or ONE newspaper, not one owning thousands.


Frankly, we should question whether or not we allow a billionaire to exist. He doesn't earn his money, he TAKES it from us by lowering wages, importing illegals, exporting jobs, getting PAID from social security to fund this garbage. And he CHEATS on taxes. At his level there are ways to do it legally, and even when they do it illegally (swiss bank, cayman islands) it's high gain/small risk.


Tell the rich elite their party is over, the income they STEAL from others will go back to the public. Imagine many, MANY people instead of struggling on <50K suddenly moving to +100K. The economy will boom, there will be a lot more tax money that high risk/low gain and more payees will help pay off (though "Welch" on it should be considered) the debt and for services.

[liberalme]

Well said and until we people start "showing" these politicians what we mean rather than venting our frustrations on places such as this, it will be business as usual.

[elgr8t1]

This is, of course, more media/government bullyhype coming from cowards hiding behind other cowards carrying a gun and wearing a badge, backed by many more of the same. And anyone who does not believe that all cops and polyticks are corrupt, you have much to learn. I did learn - firsthand. They put this hype out to arouse ones to start to threaten them so they can lock them up and get more money for lawyers. They have written the laws to allow them (governmnet money leeches) to do what they don't want the rest of the country (hand picked ones) to do without consequences, (that they wrote the laws that they would not have to face); murder, gambling, prostitution and other "illegal" sex activities, alcohol and drugs, conspiracies, corporate conspiracies, and etc. They are obviously intending to intimidate and provoke ones to seek to engage in civil war. I have been noticing that all the TV evangelist and other ministers have been preaching along certain lines that says the same thing. Just the other day I listened to John Haggee preach that the Bible "does not say,'thou shalt not kill,' but that it does say, 'thou shalt not murder." And believe me that serman was meant to twist the minds of ones, and confuse them - and, it was extremely intimidating. And I have heard several others preach along the same lines - all just recently. In fact, I have become quite familiar with their preaching, noticing that this is the same always. They all follow a paralelling pattern of preaching in efforts to confuse and wrongfully influence minds to think along the lines of how they want minds to think. Yet, conspiracies of any kind are written in law to be illegal. But at the same time the laws are written that they can't be sued or prosecuted for all the conspiracies they committ to every single day, all hand in hand with the news media. Justice is justice, not something conspiratorily written into laws. It would be justice for citizens who have the right frame of mind to put this nations government (all of them), media (all of them), and ministeries (all of them) in their proper place - (6 ft. under). In fact, intensive study of the Bible brings me to the conclusion that it is saying that very thing. They all claim they are the "Latter Day Saints." So perhaps they need to go meet "the Father" in the sky, and right away. Poof!
Bible prophecy is revealing these days, it is telling on them.

[USMC-Mom]

Why is it not considered robbery when they take this money from our checks for these purposes and its not there for these purposes?