By tradition, the public trustees of the Social Security and Medicare trust funds issue a joint message to the public upon the release of the annual trustees’ reports on the financial status of Social Security and Medicare. Since our terms expired in 2015, the public trustee positions have remained vacant. During that vacancy, we have partnered with the Bipartisan Policy Center to provide an independent review of the reports’ findings. This letter provides information about program finances that would typically be included in the public trustees’ annual letter to the public.
Absent significant financing reforms, certain findings of the annual trustees’ reports tend to remain essentially the same from year to year. Foremost among them are that both Social Security and Medicare face substantial financing challenges, and that these grow ever more difficult to surmount each additional year reforms are avoided. The 2018 reports reiterated these longstanding messages. While the long-term financial shortfall facing Social Security remains similar to that projected in previous reports, it has grown more difficult to close with another birth cohort of the large baby boomer generation having joined the retirement benefit rolls.
The trustees project that addressing the long-range (75-year) shortfall in the combined Social Security trust funds would require either a 21 percent increase in the program’s projected revenues, a 17 percent reduction in its scheduled expenditures, or an equal sized combination of more modest revenue increases and expenditure reductions. It is notable that a 17 percent expenditure reduction would affect those already receiving benefits, an outcome that, in the past, lawmakers have tried to avoid. To confine benefit reductions to those becoming newly eligible for benefits in the future, the average cut would have to be 21 percent—a figure that tends to grow with each succeeding report. Adjustments of this size would almost certainly cause significant hardship among the economically vulnerable participants who depend on program benefits for much of their retirement income. An unfortunate consequence of delay is that this hardship will only grow worse with further inaction.