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Washington (AFP) – Finances for Social Security and Medicare, two linchpins of the US social safety net, worsened last year, according official projections released Tuesday.
The solvency of the Medicare trust fund, the main US public health insurance program, deteriorated over the last year and could be exhausted by 2026 — two years earlier than previously estimated.
Meanwhile, for the first time since 1982, costs for the Social Security retirement system will exceed revenues this year.
This would leave the fund depleted by 2034, matching last year’s forecast.
While recognizing that some “long-term issues” persist, US Treasury Secretary Steven Mnuchin said Tuesday that both programs remained “secure.”
“The administration’s economic agenda — tax cuts, regulatory reform, and improved trade agreements — will generate the long-term growth needed to help secure these programs and lead them to a more stable path,” Mnuchin said in a statement.
The updates on the health of the two largest US entitlement programs were the first since December’s sweeping tax cuts, which the White House said would increase growth, offsetting lost tax revenues, something economists doubt.
The world’s largest economy has so far not reached President Donald Trump’s target of three percent growth on an annual basis.
Officials conceded Tuesday at a news conference at the US Treasury that the tax cuts had reduced revenues for Medicare and Social Security.
Medicare costs will rise from last year’s 3.7 percent of GDP to 5.8 percent by 2038. A forecast last year saw costs rising more slowly, reaching 5.6 percent by 2041.
Social Security spending, which amounted to 4.9 percent of GDP in 2017, will climb to 6.1 by 2038, an improvement over last year’s forecast, which predict it would reach this level a year earlier.
Some 58.4 million Americans depend on Medicare while 62 million receive Social Security benefits (of whom 45 million are retirees, six million are dependents and another 10 million are disabled), according to the government.
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