The total costs of Social Security will exceed total income this year for the first time since 1982, according to the annual Social Security and Medicare trustees report released on Tuesday, as funds for Medicare are expected to run dry earlier than expected.
The report says Social Security will become insolvent in 2034 - no change from the projection previous year.
A separate projection released on Tuesday showed it will become insolvent in 2034 - the same estimate as past year. The program provides health insurance to some 60 million people, most of whom are over 65 years old. But when interest income is excluded from the equation, program costs exceed income throughout the 75-year projection period.
Costs to the fund will also be slightly higher than last year's estimates, "mostly due to higher-than-expected spending in 2017, legislation that increased hospital spending and higher Medicare Advantage payments", the trust fund report said.
The country's main welfare program for retirees, Social Security, also faces an uncertain future.More news: BlackBerry KEY2 Price, Complete Specifications Leaked Ahead of Tomorrow's Launch
More news: Kanye West Responds To Tristan Thompson Cheating Scandal On New Album
More news: Trump prefers separate NAFTA negotiations with Canada and Mexico: Kudlow
"The programs remain secure", he said, adding: "The administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path". It's not just the growing number of beneficiaries as the baby boom generation continues moving into retirement.
"As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years", the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending. Government economic experts who briefed reporters Tuesday said the tax bill and other recent legislative changes from Congress on balance worsened the condition of both programs.
Additionally, President Trump's decision to end a program offering young undocumented immigrants reprieve from deportation while allowing them to work reduced anticipated tax revenue into the Social Security program.
House Speaker Paul Ryan, R-Wis., has always been an advocate for overhauling the programs, introducing a voucher-like system for Medicare and calling for partially privatizing Social Security.
In principle, the U.S.is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs.