A new report projects a $42.9 trillion shortfall for the two entitlement programs over the next 75 years.
SOURCE: Social Security and Medicare Boards of Trustees /Rich Clabaugh–STAFF
The latest annual report on the prospects for Social Security and Medicare projects a $42.9 trillion shortfall over the next 75 years, at current levels of benefits and taxation.
The message Congress is taking away from the report is that there's still time to build bipartisan consensus for reform.
"I believe that we must get serious about addressing the long-term challenges to Social Security and Medicare," said House majority leader Rep. Steny Hoyer of Maryland, in a statement. "To that end, we must begin to lay the foundation for bipartisan action on this issue in the next Congress...."
At issue are soaring healthcare costs and the retirement of the baby boomer generation, which are driving entitlement costs to grow at a rate much faster than the US economy over the next several decades.
"Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues, and threaten America's future prosperity," said Treasury Secretary Henry Paulson at a briefing Tuesday, releasing the report by the trustees for Social Security and Medicare.
Social Security's current annual surpluses will begin to decline in 2011, and slip into deficit in 2017. Over the next 75 years, that means finding an additional $4.3 trillion (in today's dollars) to pay for the program.
But the shortfall for Medicare comes sooner and is even more severe. While Medicare's annual costs were 3.2 percent of GDP in 2007, they are on track to surpass Social Security expenditures in 2028 and reach 10.8 percent of GDP in 2082.
To put it another way: It would take an immediate 122 percent increase in the payroll tax (to 6.44 percent) or a 51 percent reduction in program outlays to bring Medicare into balance, the trustees said.