Charles Blahous and Jason Fichtner on the 2017 Social Security and Medicare Trustees' Reports
The Mercatus Center’s Charles Blahous, a former public trustee for Social Security and Medicare, notes:
“By the time these programs’ trust funds are depleted, it will be too late to shield vulnerable program participants from substantial harm. To avoid disruptive consequences for beneficiaries and taxpayers alike, lawmakers will need to enact financial corrections much sooner.”
Mercatus Center Senior Research Fellow Jason Fichtner, former deputy commissioner and chief economist of the Social Security Administration, notes:
“The insolvency date for the overall program [Social Security] has not changed from last year, but is now one year closer. With every year that passes, without fundamental reform, we lose opportunities to responsibly place the program on a sound financial footing to ensure the long-term viability of the program on which so many Americans depend.
I fear the lack of change in the depletion date for Social Security’s combined trust funds will give lawmakers and the public a false sense that the program’s financial problems are less than urgent—that reform can continue to be put off. Such a misunderstanding would lead to grave consequences for beneficiaries of both the disability and retirement programs.
Although this report suffered once again from the lack of oversight by public trustees, it is notable that the new Trump administration trustees see the looming problem for the retirement program and overall financial status of the combined trust funds as essentially unchanged.
One notable change in this year’s report is the financial status of the Disability Insurance trust fund. As a result of the Bipartisan Budget Act of 2015 (BBA 2015), a payroll tax reallocation from the OASI trust fund to the DI trust fund resulted in an extension of the SSDI trust fund until 2022, based on the estimates in the 2016 report. Now, due to lower than expected recent DI applications and awards, the DI trust fund gains five years and insolvency is now estimated to occur in 2028, under the 2017 annual report. However, the now decade away insolvency of the DI trust fund should not give lawmakers and the public a false sense of security. The disability insurance program is in need of reform.”
For more information, please contact Camille Walsh at (703) 993-4895 or [email protected].