Paulson: Action needed on Social Security

Wednesday, March 26th, 2008 

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CNN Article

Borrowing from the future

For years, the Social Security program has been taking in more in payroll taxes from existing workers than it needed to fund benefits. The government borrowed that surplus and promised to pay it back with interest by issuing special issue bonds to the program.

But the proceeds from those bonds are finite, which is why the trustees estimate that the trust fund will run dry by 2041. Without that cushion, Social Security would only be able to pay out the money it collects in payroll taxes.

and,

Medicare a bigger headache

Medicare, which was also addressed in Tuesday’s report, has an even larger and more immediate funding deficit to address.

The Medicare program is already taking in less than it has committed to pay out, and the trustees forecast that the Medicare trust fund will be depleted by 2019, at which point Medicare would only be able to pay out 78% of costs.