The recent annual federal government report suggests that the US Social Security program may cease to be solvent a year earlier than expected, due to the coronavirus pandemic.
Like many governments around the world, the closure of businesses and other vital sectors of economic activity have significantly contributed to the acceleration of revenue decline. Deficits and debts are increasing, and countries are burning through capital quicker than ever because of reduced consumer spending and furlough schemes.
The report highlighted concerns that the US economy is facing an uncertain future on its prosperity, as the highly transmissable Delta variant and lower than expected vaccine uptake among Americans have caused Coronavirus cases to surge once again.
The document said that Medicare financing continues to be stable, but concerns are emerging over the Social Security program’s future. Medicare expenses decreased over the course of last year, as many Americans did not take up care for non-urgent emergencies due to the fear of catching the Coronavirus. The report stated that analysts did not believe the impact of Covid-19 will be felt by Medicare in the long term. But, expenses may increase slightly due to the complications that may be experienced by what is known as ‘Long Covid’.
The Treasury Secretary Janet L. Yellen said:
“Having strong Social Security and Medicare programs is essential in order to ensure a secure retirement for all Americans, especially for our most vulnerable populations..”
“The Biden-Harris administration is committed to safeguarding these programs and ensuring they continue to deliver economic security and health care to older Americans.”
It is expected that the Social Security Old-Age and Survivors Insurance Trust Fund will be depleted by 2033, a year earlier than anticipated. The expense of scheduled payments will exceed the tax revenue received by the federal government, causing the program to become insolvent. The report said that unless structural reforms are made, only 76% of scheduled payments can afford to be paid out. However, both Democrats and Republicans have a tendency to be skeptical on reforming benefit programs.
Those part of the Democrat Party are hoping to include dental, hearing and vision-related care into Medicare. However, this will not affect the expenditure of the trust fund, since that only covers care given in hospitals.
The statistics from this annual government report may encourage Democrats and Republicans to finally make structural reforms to the Social Security programs in order to make it more financially sustainable in the long term.