Today the Trustees of Social Security and Medicare announced that both programs’ trust funds will face exhaustion earlier than expected, with Social Security projected to become insolvent in 2033, and Medicare in 2024. This is three years earlier than projected last year for Social Security, and the same as last year for Medicare.

Social Security's finances are out of balance--getting the trust fund back on solid footing would require an immediate and permanent increase in the payroll tax from 12.4 percent to 15.1 percent, or an immediate and permanent reduction in current benefits by 16.2 percent, or some combination of the two. However, the more sensible approach is to raise the retirement age and change the annual cost-of-living adjustment so it’s tied to the Consumer Price Index (chained-CPI). These modest changes recognize that people are living longer and the Social Security program needs to adjust to a 21st century workforce.

For the past two years, Congress has attempted to use Social Security’s primary funding source—the payroll tax—as temporary economic stimulus. But while the trust fund appears unscathed, this is far from free money. We have to replenish the trust fund by borrowing more money, which just gets piled onto the $15-trillion national debt. Taxpayers will be paying the interest on this loan for decades to come.

To shore up the Social Security trust funds today so that there would be enough money to pay for scheduled benefits would require an immediate infusion of $8.6 trillion. That's almost half the size of the nation's economy.