WASHINGTON, May 13 (UPI) -- U.S. Social Security trust fund payments topped income by $49 billion in 2010 and will be $46 billion more in the hole by the end of 2011, trustees said Friday.
The report issued by Charles P. Blahous III and Robert D. Reischauer also said Medicare accounted for 3.6 percent of gross domestic product last year and will grow to 5.5 percent by 2035 and 6.2 percent by 2085.
"The financial conditions of the Social Security and Medicare programs remain challenging," the trustees said in their annual report. "Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative modifications if disruptive consequences for beneficiaries and taxpayers are to be avoided."
The report projects Social Security will not have enough money to pay full benefits after 2036 and Medicare by 2024 unless action is taken to shore up the systems.
The 2010 Social Security deficit was the first for that program since 1983, the result partly of the recession, which meant fewer people working and contributing to the trust fund.
The report said Medicare's situation would be even worse were it not for healthcare reform passed last year, which reduced annual payment increases for most Medicare services, noting, however, "the long-term viability of this provision is debatable."
"The financial challenges facing Social Security and Medicare should be addressed soon," they said. "If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected can adequately prepare. …
"Under current law, demographic trends will be the primary driver of cost growth for both Social Security and Medicare over the next couple of decades. The leading edge of the large baby boom generation began signing up for retirement benefits in 2008 and Medicare coverage in 2011. This generation will dramatically increase the number of program beneficiaries through the mid-2030s, while also living longer than previous generations and having produced fewer children than did their own parents. …
"Even in advance of these deliberations, we believe that the essential message conveyed by these reports is clear and will not change, absent legislation: that the vital Social Security and Medicare programs face real and substantial challenges, and that elected officials will best serve the interests of the public if financial corrections are enacted at the earliest practicable time."