By the year 2080 both Social Security and Medicare are expected to consume almost 20% of the U.S. GDP. That means for every $5 of economic activity taking care of the elderly using the big taxpayer credit card will consume $1 of that output. Trillions of dollars. That is not fair.

Now I wait for someone to tell me that the SS Trustees are lying and don't know what they speak of.

Question: when outlays exceed inflow then how will a trust fund exist? You can't even sell worthless bonds to the Federal government without a surplus.

Failure.


Social Security
The annual cost of Social Security benefits represents 4.2 percent of gross domestic product (GDP) in 2005 and is projected to rise to 6.2 percent of GDP in 2030, and then slightly to 6.3 percent of GDP in 2080. The projected 75-year actuarial deficit in the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds is 2.02 percent of taxable payroll, up from 1.92 percent in last year's report. This increase is due primarily to advancing the projection period, the availability of recent data that led to revisions in key assumptions, and to changes in methods. Although the program passes our short-range test of financial adequacy, it continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2017, and will be sufficient to finance only 74 percent of scheduled annual benefits in 2040, when the combined OASDI trust fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 16 percent in payroll tax revenues or an immediate reduction in benefits of 13 percent (or some combination of the two). To the extent that changes are delayed or phased in gradually, greater adjustments in scheduled benefits and revenues would be required. Ensuring that the system is solvent on a sustainable basis over the next 75 years and beyond would also require larger changes.

Medicare
As we reported last year, Medicare's financial difficulties come sooner-and are much more severe-than those confronting Social Security. While both programs face demographic challenges, the impact is more severe for Medicare because health care costs increase at older ages. Moreover, underlying health care costs per enrollee are projected to rise faster than the wages per worker on which the payroll tax is paid and on which Social Security benefits are based. As a result, while Medicare's annual costs were 2.7 percent of GDP in 2005, or over 60 percent of Social Security's, they are now projected to surpass Social Security expenditures in a little more than 20 years and reach 11 percent of GDP in 2080.
Summary of the 2006 Annual Reports