WASHINGTON—A new report contains blunt warning signs of an approaching fiscal crisis in federal trust funds backing Social Security, Medicare, flood insurance, and many other programs, according to Senate Budget Committee Chairman Mike Enzi (R-Wyo.).
“The GAOs new report is another warning sign that Social Security, Medicare, and other trust fund programs on which many Americans rely are in danger of going broke,” Enzi said Jan. 23 in releasing the Government Accounting Office (GAO) analysis.
“Congress will need to work in a bipartisan manner to safeguard these programs to ensure they are able to provide for those who need them now, and in the future,” Enzi said in a statement accompanying the release.
Enzi and budget panel member Sen. Mike Braun (R-Ind.) requested the report, which took more than a year to complete.
Braun said the report highlights the need for political leaders to confront the trust fund problem without further delays.
“The nation is $23 trillion in debt and is now running trillion-dollar deficits,” Braun said in the statement. “Congress needs to come together and make tough decisions to preserve these trust fund programs that so many Americans depend on for their way of life, for today and for generations to come.”
The collective total for all federal trust fund balances increased between fiscal years 2014 and 2018, according to Enzi and Braun, but that balance will begin declining in 2022, with decreases in Social Security and the Medicare Hospital Insurance funds leading the way.
A senior Senate Republican aide speaking on background Friday told The Epoch Times that the crucial message from the GAO analysis is that “while every major federal department has trust funds, many of them are not fully supported by dedicated revenues and are in danger of becoming insolvent in the near future.”
The aide pointed to examples in the GAO report of the most seriously deficient trust funds, including:
- By 2022, the federal Highway Trust Fund will be so depleted that its income will be insufficient to meet projected obligations for infrastructure repairs and construction.
- By 2025, the Pension Benefit Guarantee Corporation (PBGC) multi-employer trust fund is rapidly depleting and will not be able pay full benefits in plans that go insolvent.
- By 2026, the Medicare Hospital Insurance Trust Fund will be so depleted that its income will only be sufficient to pay 89 percent of scheduled benefits.
- By 2034, the Social Security Old-Age and Survivors Insurance (OASI) trust fund will be so depleted that its income will only fund 77 percent of scheduled benefits.
When such trust funds income and assets arent big enough to pay promised benefits, Congress has few options: Appropriate tax dollars from the governments general revenues to cover the difference, which may require reduced spending in other areas such as national defense; decrease the promised payments or increase federal levies on individuals and corporations.
In addition, many of the federal trust funds are linked to programs that legally entitle recipients to the benefits, thus potentially prompting an explosion of litigation in legal challenges to congressional actions to lower payments.
“Of the 23 largest trust funds and other dedicated funds we reviewed, 13 have entitlement authority, which legally requires payments to individuals or governments that meet the requirements of the programs,” GAO said in its report.
“For example, OASI beneficiaries are legally entitled to benefits based on a formula that takes into account the time they spent working and their earnings, among other factors,” the report continued.
“Program sustainability is ultimately determined by whether the government as a whole has the economic capacity to financeRead More – Source