Wednesday, March 26, 2008
The future cost outlook of Social Security and Medicare looked slightly better in the 2008 report from the programs' trustees released today, but the long-term financial viability of the benefit programs was just as problematic. 'The Social Security program is financially unsustainable and requires reform', said Treasury Secretary Henry Paulson, who is one of the trustees. And, just as it did last year, 'the Medicare program poses a far greater financial challenge than Social Security'. Medicare begins to run out of money much faster than Social Security does. Its basic Hospital Insurance trust fund is projected to start having a negative cash flow this year, assets are expected to fall below annual spending by 2013 and the trust fund should be exhausted in 2019. Those are the same dates projected in the 2007 trustees' report. The various expiration dates for Social Security are much farther in the future, but also unchanged in the 2008 report. Social Security tax revenue will fall below outlays in 2017 and the trust fund itself will run out in 2041. The one improvement the outlook noted by the trustees this year is that the combined cost of Social Security and Medicare, which was about 7.5 pct of the US GDP last year, is now projected to reach 16.6 pct of GDP in 2082, down from 17.6 pct in last year's forecast.
Source: Forbes, http://www.forbes.com/markets/feeds/afx/2008/03/25/afx4813006.html
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