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The bad news on entitlements piles up – AEI – American Enterprise Institute: Freedom, Opportunity, Enterprise

The trustees for the Social Security and Medicare trust funds released their annual reports last week. And the takeaway? Despite a strong economy, both programs have large and growing financial deficits. Unfortunately, the gap between spending and revenue for these programs is likely even larger than the official projections show because of assumed but unrealistic cuts in medical care payment rates and the persistently low birth rates of recent years.
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The Social Security report estimates the program will run out of reserves in 2034, after which benefits would have to be reduced by about 25 percent to keep spending within available annual revenue. Over 75 years, Social Security has an unfunded liability of $13.2 trillion. Restoring permanent solvency to the program would require raising the payroll tax rate immediately from today’s combined employer-employee rate of 12.4 percent of taxable payroll to 15.2 percent. Alternatively, Social Security benefits would need to be cut

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