Medicare, Social Security Eroded by Recession Losses

The financial underpinnings of the Medicare and Social Security programs have eroded substantially as a result of the nation's recession, according to a government forecast issued today.

The report, by the trustees who monitor the fiscal health of the twin pillars of the government's assistance to older Americans, shows that Medicare remains the more urgent problem, with its trust fund predicted to run out of money in 2017, two years earlier than projected a year ago. The report also says that the Social Security system will become insolvent by 2037, four years sooner than the estimate given last year.

The trustees' report is the official, yearly appraisal of the fiscal health -- or fragility -- of the two massive entitlement programs. And over the years, the forecasts have been intertwined with political debates over how to try to ensure that the nation's retirement system can withstand the aging of the giant Baby Boom generation and -- more recently -- the country's economic downturn.

In March, the Congressional Budget Office gave its own forecast of the deteriorating finances of the Social Security system, saying that a longstanding surplus in the program's trust fund would diminish by next year, more quickly and dramatically than predicted in the past.

Today's news is more somber than that during the milder recession earlier this decade, when the economy made little dent in the trust funds that support monthly Social Security checks and the hospital part of Medicare health care benefits.

Today's report reflects the fact that fewer workers have been paying into both systems, as the country has lost 5.7 million jobs since recession began in December 2007.

President Obama has consistently said that finding ways to rein in Medicare's expenditures is essential to revamping the nation's health care system--and stabilizing the nation's economy overall. And at what the White House called a "fiscal responsibility summit" convened in February, the president's top economic advisers reiterated that the administration is committed to placing Social Security on more solid financial footing. However, they have provided few details of how or when they plan to pursue that goal, even as key Democrats and Republicans in Congress have said in recent days that they would like to begin consider substantial changes to the retirement program this fall.