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Jed Graham in Investor’s Business Daily reports that a new study of the financial condition of Social Security and Medicare indicate that with baby boomer retirements, rising health costs, and the ongoing economic malaise, these federal entitlement programs are producing massive deficits in perpetuity unless major changes are made to cut these unsustainable liabilities.
Social Security and Medicare — the elephants sidelined in the latest budget talk — took center stage Friday as trustees’ annual reports showed both programs’ finances have deteriorated.
Social Security’s trust fund — which gives it carte blanche to spend beyond the government’s means until its IOUs from the Treasury Department run out — is now seen running empty in 2036, a year earlier.
Medicare’s Hospital Insurance trust fund reserves are projected to dry up in 2024, five years earlier than in the 2010 report.
The big picture is that spending on these entitlements for seniors and the disabled is on pace to rise more than 50% faster than the economy from 2007 to 2030.
Fueled by baby boomer retirements and rising medical costs, the programs are projected to cost 11.3% of GDP in two decades vs. 7.4% in 2007. This year, they’ll cost 8.5% of GDP, or 37% of non-interest spending.