Social Security and Medicare Reports Highlight Need to Raise Payroll Taxes By Three Percent

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The latest Social Security and Medicare Trustee Reports show that at least one of the trust funds will be depleted in 12 years and both programs will require a large increase in payroll taxes, benefit cuts, or some combination of those two actions in order to maintain their solvency.  According to the Medicare Trustee Report, the program's hospital trust fund will be depleted in 2029, at which point Medicare Part A would only be able to pay 88 percent of expected benefits.  In order to make the program solvent, payroll taxes would have to be immediately increased by 0.64 percent, benefits would have to be immediately cut by 14 percent, or some combination of the two would have to take place.  According to the Social Security Trustee Report, the Social Security retirement trust fund will be depleted in 2035, while the disability program's trust fund will be depleted in 2028.  At those points, Social Security will have enough revenue to pay just 75 percent of scheduled benefits and the disability program will have enough revenue to pay 93 percent of scheduled benefits.  In order to make both programs solvent, payroll taxes would have to be immediately increased by 2.75 percent, benefits would have to be immediately cut by 17 percent, or some combination of the two would need to occur.