Stephen Goss, chief actuary of the Social Security Administration, testifies on the solvency of Social Security during a House Ways and Means subcommittee hearing Friday on Capitol Hill in Washington, D.C. Photo by Kevin Dietsch/UPI | License Photo
July 14 (UPI) -- The Social Security and Medicare trust funds will not be able to pay all debts inside of 20 years unless Congress acts, an annual report by the Treasury Department predicted.
The forecast was included in a 269-page trustee's report released Thursday. It means that by 2034, the program will have enough revenue to cover 77 percent of promised Social Security and Medicare benefits.
"The trajectory is still alarming," said Secretary of Health and Human Services Tom Price. "The bottom line is it must be addressed."
In the period from 2018-27, Social Security will run deficits totaling $1.4 trillion, and $4.9 trillion in the following decade, the report said.
The non-government organization Committee for a Responsible Federal Budget, in a response to the report, noted that the Social Security Administration will pay out $27 billion more in benefits in 2017 than it will generate in tax revenue.
The report said failure to address the problem soon will lead to all Social Security beneficiaries seeing a cut in benefits within 17 years.
"Social Security insolvency is no longer a problem only for future generations. Without action, current workers and even current retirees will face a 23 percent, across the board cut in just 17 years. That is when today's 50-year-olds reach the normal retirement age and today's youngest retirees turn 79," said Maya MacGuineas, CFRB's president.
Stephen Goss, chief actuary for the SSA, testified Friday before the House ways and means Subcommittee on Social Security, saying that due to continuing lower-than-expected disability application and incidence rates, the Disability Insurance Trust Fund has been extended by five years. The fund will run out of reserves by 2028.
He said the Old-Age and Survivors Insurance Trust Fund reserves increased by $21 billion and the DI fund increased by $14 billion, both more than projected by last year's report. Combined reserves, or OASDI, were nearly $2.85 trillion, about three times the annual cost of the program.
Goss said the reserves will continue to grow over the next three years, but starting in 2022, will decline.
"The long-known and understood shift in the age distribution of the United States population will continue to increase the aged dependency ratio, and in turn increase the cost of the OASDI program as a percentage of taxable payroll and GDP," he said Friday.
"Once this shift, reflecting the drop in the birth rate after 1964, is complete around 2035, the cost of the program will be relatively stable at around 6 percent of GDP."
The trustee's report also said that Social Security beneficiaries are projected to receive a 2.2 percent increase in their monthly payments, as a cost of living adjustment, in 2018. The official increase will be announced in October.