Social Security and Medicare Reports Highlight Need to Raise Payroll Taxes

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The Social Security and Medicare trustees released reports this week showing that both trust funds will be depleted in 19 years and will require a large increase in payroll taxes, benefit cuts, or some combination of the two.  According to the Social Security Trustee Report, the Social Security retirement trust fund (OASI) will be depleted in 2035, while the disability program's (DI) trust fund will be depleted in 2023, just seven years from now.  At those points, Social Security will have enough revenue to pay just 77 percent of scheduled benefits and the disability program will have enough revenue to pay 89 percent of scheduled benefits.  In order to make both programs solvent, payroll taxes will have to be immediately increased by 2.58 percent, or benefits would have to be immediately cut by 16 percent, or some combination of the two.  According to the Medicare Trustee Report, the program's hospital trust fund will be depleted in 2028, two years earlier than projected last year.  At that point, Medicare Part A would only be able to pay 87 percent of expected benefits.  In order to make the program solvent, payroll taxes will have to be immediately increased by 0.73 percent, or benefits would have to be immediately cut by 16 percent, or some combination of the two.