ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
The nation's two most important programs for seniors, Social Security and Medicare, will exhaust their trust funds earlier than projected. That's according to the annual report released today by the program's trustees.
As NPR's John Ydstie reports, both programs' finances have been hurt by the poor economy and high unemployment.
JOHN YDSTIE: Just during the last year, the weak economy meant Medicare took in two and a half billion dollars less in tax revenue than had been anticipated.
For Social Security, high unemployment now means it's unlikely that a year's worth of payroll taxes alone will ever be enough under current law to pay for a year's worth of benefit. Prior to the financial crisis and recession, payroll taxes had been expected to fully cover benefits until around 2017.
Treasury Secretary Timothy Geithner, who is by law the managing trustee of the Social Security and Medicare trust funds, summed up the situation this way as he presented the trustees report at the Treasury building today.
Secretary TIMOTHY GEITHNER (Department of Treasury): Social Security and Medicare benefits are secure today, but reforms will be needed so that they will be there for current and future retirees.
YDSTIE: The trustees projection shows Social Security will have the resources to pay full benefits through 2036. That's one year less than was projected last year. At that point, its trust fund will be exhausted. But Social Security commissioner Michael Astrue emphasizes that does mean the system will be bankrupt.
Mr. MICHAEL ASTRUE (Commissioner, Social Security): What exhaustion in 2036 means is that we'll have money to pay a little bit more than three-quarters of benefits with no other legislative changes. Now that's not good. You know, we need to have the Congress step up and make changes so that that's not the outcome.
YDSTIE: But so far, changes in Social Security are not on the table and the negotiations between congressional Republicans and the White House over the 2012 budget. That's not the case with Medicare, where the problem is more urgent. And today's news on the health of the Medicare Hospital Insurance Trust Fund will only intensify the political wrangling.
Again, Secretary Geithner.
Sec. GEITHNER: Medicare's Hospital Insurance Trust Fund will exhaust its assets in 2024, which is five years earlier than was projected in last year's report.
YDSTIE: Geithner said the earlier exhaustion was largely due to changes in the economic assumptions underlying the trustees report. Those changes transformed small, positive balances in the Hospital Insurance Trust Fund in last year's report to small negatives in this year's report.
But Geithner did say the earlier depletion highlights the important of the president's health care overhaul passed last year. He said it will cut Medicare costs over time.
Republicans take issue with that, arguing ObamaCare, as they call it, will boost costs. They've proposed transforming Medicare into a voucher program. Health and Human Services Secretary Kathleen Sebelius, another trustee, ratcheted up the political tone of the news conference by dismissing the Republican proposal.
Secretary KATHLEEN SEBELIUS (Department of Health and Human Services): What we can't do is follow the Republican plan to turn Medicare into a voucher program and shift the cost to seniors.
YDSTIE: Today's trustees report also shows the disability insurance portion of the Social Security trust fund running out of money by 2018. The poor job market of recent years has led to a big jump in the number of people filing for disability insurance, which has put strains on the system.
Social Security Commissioner Astrue said it's important for Congress to reform the law to create clearer incentives to encourage people to leave the disability program if their condition improves and they can find jobs.
John Ydstie, NPR News, Washington.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.