The recently-released 2019 annual report of the Social Security and Medicare trustees reminded everyone that Social Security and Medicare face long-term financial challenges, since each relies on an ever-present, giant pot of money to function. The report indicates that Social Security’s costs will exceed its income in 2020 for the first time in almost 40 years, and both programs might run out of money by 2035. To keep them viable, Congress and President Trump need to trim benefits or raise taxes (or both).
There is some good news, however. Social Security’s Disability Insurance (DI) Trust Fund, which provides assistance for non-elderly people who are injured or too sick to work, will be able to cover all obligations until 2052.
The long-term jobless tend to use DI when employment runs out during a recession. But conditions improved in the workforce: tight labor markets combined with low unemployment rates brought many formerly disabled people back to work.
Improvement in the program shows that economic growth can have a positive effect on federal entitlement programs, even without legislative involvement. It is important for Congress, however, to remain cognizant of how quickly conditions can change and take the necessary steps to safeguard the program long-term.