Ryan: Trustees Report Confirms Need for Reform to Strengthen Social Security for the Long Term
March 23, 2005
WASHINGTON -Today the Social Security and Medicare Trustees issued their annual reports on these programs' financial outlook, adjusting their estimates in the process. The 2005 Social Security Trustees Report projects that, in the year 2017, Social Security will begin paying out more in benefits than it takes in through payroll taxes. (Last year's report projected this would occur in 2018.)
At that point, in order to keep paying scheduled benefits, the government will need to find funds to cover this shortfall. Because the "trust fund" is full of government IOUs, rather than cash reserves or investments backed by cash, it will not be of practical assistance in paying the shortfall and the government will face several painful options including tax hikes, continuous borrowing, or reductions in benefits.
"This annual report confirms what we already knew - that we need to fix the system if it is to be strong for our children and grandchildren. If nothing is done to put Social Security on a path to permanent solvency, future generations will bear the burden of much higher taxes, substantial benefit cuts, ever-increasing government debt, or a combination of these," Ryan said.
"The trustees' evaluation of Medicare shows that its financial problems must be addressed as well," Ryan said. "Congress took the first steps to update Medicare when we passed major legislation in 2003, but important parts of this law have not yet taken effect. It would be helpful if we could look at the impact this law has, when fully enacted, on Medicare's costs, in order to guide future reform efforts to strengthen Medicare."