Social Security says system's costs will exceed income this year

Social Security says system's costs will exceed income this year

Social Security says system's costs will exceed income this year

The report also forecasts that Medicare's giant trust fund for inpatient care won't be able to cover projected medical bills starting in 2026, three years earlier than previously expected.

At this rate, the combined asset reserves of Social Security's twin retirement and disability trust funds would become depleted by 2034, the same as projected a year ago, with 79% of the benefits payable at that time, according to the report.

Last year, Representative Deutch and Senator Hirono reintroduced the Protecting and Preserving Social Security Act, which would strengthen and improve the Social Security program by restoring fairness in contributions and providing more accurate measures to determine annual cost of living adjustments (COLA) for beneficiaries.

The projections are the first from the administration since Trump signed a $1.5 trillion tax cut into law in December.

President Trump has said he won't cut Social Security or Medicare, and his administration says that a strong economy will bolster both programs. At that point the program would only be able to pay out 91% of promised benefits. Social Security and Medicare probably will never run out of money, in the sense that no Congress or president would let benefit checks be cut.

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US Treasury Secretary Steven Mnuchin, who also serves as a trustee for both programs, admitted there were "long-term issues", but dismissed concerns about the programs' future solvency.

"As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years", the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending.

Medical costs have long outpaced economic growth, and despite some slowdowns in cost over the past few years, that has not changed.

During the year, an estimated 174 million people had earnings covered by Social Security and paid payroll taxes on those earnings. This deficit will continue as the baby-boom population ages further expanding rolls. The ratio of workers to beneficiaries fell to 3.3 in 2005 and then to 2.8 in 2016. Social Security's cost has exceeded its non-interest income since 2010. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.

Information for this article was contributed by Robert Pear of The New York Times, and by Ricardo Alonso-Zaldivar and Andrew Taylor of The Associated Press.

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