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Social Security is dipping into its reserves for the first time in 36 years.

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Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year. 

Medicare’s hospital insurance fund will be depleted in 2026, said the trustees who oversee the benefit program in an annual report. That is three years earlier than projected last year.

This year, like last year, Social Security’s trustees said the program’s two trust funds would be depleted in 2034. 

For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year. 

It should be stressed that the reports don’t indicate that benefits disappear in those years. After 2034, Social Security’s trustees said tax income would be sufficient to pay about three-quarters of retirees’ benefits. 

Congress could at any time choose to pay for the benefits through the general fund.

Medicare beneficiaries also wouldn’t face an immediate cut after the trust fund is depleted in 2026. The trustees said the share of benefits that can be paid from revenues will decline to 78% in 2039. That share rises again to 85% in 2092. The hospital fund is financed mainly through payroll taxes. 

Social Security trustees said that reserves for the fund that pays disability benefits would be exhausted in 2032. Combined with the fund that pays benefits to retirees, all Social Security reserves would be exhausted by 2034, they said. 

The trustees said Medicare’s changed outlook is due to adverse changes in the program’s income and costs. Hospital insurance fund income is projected to be lower than last year’s estimates thanks to “lower payroll taxes attributable to lowered wages in 2017 and lower levels of projected GDP,” the trustees said. 

And hospital insurance fund expenditures are expected to be higher than last year’s estimates, the trustees said. 

Treasury Secretary Steven Mnuchin said in a statement that “lackluster economic growth in previous years,” as well as an aging population, has contributed to shortages for both Social Security and Medicare. He said the Trump administration’s economic agenda, including tax cuts and trade deals, would generate growth and help to secure the programs. 

AARP said in a statement that the report showed “challenges ahead for the long term,” and singled out health care for action during the election year. “In particular, we need to take further steps to lower the cost of health care, especially the ever-rising price of prescription drugs,” the organization said.

https://www.marketwatch.com/story/medicares-finances-are-getting-worse-as-social-security-taps-into-fund-for-first-time-in-36-years-2018-06-05

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This should be causing many people (retirees) to be throwing their hands up in the air demanding changes now rather than waiting until it is "unfixable".

Oh wait... it is already "unfixable".

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There are about 4 sides to this story, and each has a little bit of truth to it. The one with the most truth and the most evidence behind it is the one that Allen Smith (PhD) gives here:

https://www.fedsmith.com/2013/10/11/ronald-reagan-and-the-great-social-security-heist/

This differs from another version, actually almost identical to SSA's own version, found on the same Website, https://www.fedsmith.com/2015/12/08/the-myth-of-the-missing-social-security-trust-fund/

But if you read between the lines, it's easy to see that most of the second version is just spin (propaganda) that actually ends up supporting the first link. It inadvertently admits many of the key points necessary to understand the fraud. The first link blames Reagan, Greenspan and Bush I, Clinton, Bush II, and Obama, who have given evidence that they actually understood the scheme, but were happy to go along with it. My youngest son, in 2012, took economics courses from his university's Economics Dept Chair, who was simultaneously one of Obama's primary economics advisors. My son came away from these classes believing that economics at this school was the most corrupt of all their departments, claiming to teach modern western economics as if it were a science, but angrily denouncing certain questions about facts as if they were really running a cult.

At any rate the first link must be read before a realistic discussion of Social Security can start. The basic idea is that Reagan and Greenspan were con men who ripped off the SSA for $2.7 Trillion with no plan to pay back a cent. They needed it because supply-side "trickle-down economics" (Reaganomics) was a complete failure, but they couldn't admit it. The money was used to avoid an even bigger deficit and was used in order pay for the highest priority government programs like:

  • temporary, pseudo-tax breaks for middle class that can be nullified through fees and other new costs put upon the middle class (including the taxing of Social Security by Reagan),
  • actual permanent tax breaks for the rich,
  • spending to enrich military contractors,
  • slush funds for internal government spending.
5 hours ago, The Librarian said:

Oh wait... it is already "unfixable".

One point of the article is that SSA is not unfixable because it was never broken in the first place. These 20-year-out projections have always been lies that were not based in reality. There is no fund to dip into. It is true that there is borrowing trouble now, but the plan to cover population age disparity was already built into the fund that Reagan figured out how to "loot." It was exactly what would have now been needed to cover the level of borrowing that is now being done to cover the next 20 years, until the age population disparity evens out again.

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