This week, the Social Security and Medicare Trustees released their annual reports on the financial health of the programs. In addition, Senator David Vitter’s (LA) Notch Fairness Act and Representative Buck McKeon’s (CA-25) Social Security Fairness Act each gained one new cosponsor.
Trustees Release Annual Reports
On Monday, the Social Security and Medicare Trustees reported on the financial standing of both programs. According to the six Trustees, Social Security and Medicare are worse off than they were just one year ago. Social Security’s combined OASDI Trust Funds will reach exhaustion in 2033, three years earlier than last year’s report projected. Medicare’s Hospital Insurance Trust Fund will face insolvency in 2024, the same date that was projected last year. However, the program’s actual costs are expected to exceed estimates since the Trustees could not account for the costly “doc fix,” which Congress will likely vote for at the end of this year.
According to Michael Astrue, the Commissioner of Social Security, the report “contains troubling, but not unexpected, projections about Social Security’s finances.” Income including interest to the combined OASDI Trust Funds totaled $805 billion in 2011, while total expenditures amounted to $736 billion. Non-interest income fell below program costs, however, and should continue to do so through the remainder of the 75-year period. The Trustees estimated that 158 million people paid Social Security payroll taxes in 2011, while approximately 55 million collected Social Security benefits.
This year, for the sixth straight year, the Trustees issued a “Medicare funding warning.” Marilyn Tavenner, CMS Administrator, stated: “While Medicare is stable for now, we have a lot of work ahead of us to guarantee its future.” Expenditures by the Hospital Insurance Trust Fund have exceeded income since 2008 and are expected to do so for the foreseeable future. The Trust Fund is expected to cover only 87 percent of costs in 2024 and 67 percent of projected costs in 2050.
At Monday’s press conference, all six Trustees commented on the need for Congress to make some changes to both programs to ensure their financial stability. The Senior Citizens League agrees that both programs must be returned to solvency to ensure that future retirees receive the security they deserve. However, we firmly believe that any changes to either program should be phased in gradually and should not affect those seniors nearing or currently in retirement.
Support Grows for Key Bills
This week, one new cosponsor – Senator Dean Heller (NV) – signed on to Senator David Vitter’s (LA) Notch Fairness Act (S. 118). Senator Heller is currently the bill’s only cosponsor.
If signed into law, the Notch Fairness Act would provide modest compensation to Notch babies, or those individuals who receive lower Social Security benefits because they were born between 1917 and 1926. TSCL feels that this inequity was brought about by the Social Security Act Amendments that were signed into law in 1977. Just years before they were set to retire, these individuals learned that they would have significantly lower benefits than originally anticipated. TSCL strongly supports the Notch Fairness Act, which would provide Notch babies with either a $5,000 lump-sum payment or an increased monthly benefit.
In addition, one new cosponsor – Rep. William Lacy Clay (MO-1) – signed on to the Social Security Fairness Act (H.R. 1332) this week, bringing the total up to 167.
The Social Security Fairness Act, if signed into law, would amend the Social Security Act by repealing the government pension offset (GPO) and the windfall elimination provision (WEP). TSCL believes that these two provisions unfairly reduce the earned Social Security benefits of millions of teachers, firefighters, peace officers, and other state or local government employees each year. We were pleased to see support grow for the Social Security Fairness Act this week.