US Treasury Secretary Henry Paulson said Tuesday that America’s Social Security program for the retired is “financially unsustainable” and needs an urgent overhaul.
Paulson, speaking after a government panel had completed its annual assessment of the Social Security and Medicare benefits programs, said waves of retiring Americans threaten to soon deplete available funds stockpiled in the two programs.
“As the baby boom generation moves into retirement, these programs face progressively larger financial challenges,” Paulson said.
The Treasury secretary said a growing number of retirees and the programs’ rising costs could harm America’s future prosperity if Social Security and Medicare are not overhauled and bolstered.
The needs of the Social Security program, which provides retirement benefits to all Americans as long as they have contributed to the program, are less acute, however, than Medicare.
Paulson said the Social Security program’s cash flows are projected to turn negative in under 10 years and that a Social Security trust fund would likely be exhausted in 2041 without urgent reform.
Social Security’s unfunded obligation, the difference between the present values of Social Security inflows and outflows less the existing trust funds, equals 4.3 trillion dollars over the next 75 years and 13.6 trillion on a permanent basis, according to the Treasury.
Medicare, which pays medical bills for retired Americans, is facing bigger financial challenges because of soaring health care and drug costs.
Medicare’s annual costs were 3.2 percent of gross domestic product (GDP) in 2007, or nearly three-quarters of Social Security’s, but are projected to surpass Social Security expenditures in 2028 and soar to nearly 11 percent of GDP in 2082, compared to 5.8 percent for Social Security, according to figures provided by the Treasury.
Paulson said the annual review of the two benefits programs would be sent to Congress and he urged US lawmakers to address the plans growing demands.
“Our nation needs a bipartisan effort to strengthen both programs for future retirees,” Paulson said.
US President George W. Bush has called for bipartisan action that would make the Social Security program permanently sustainable