“This year’s trust Social Security Report projects that the Trust Fund will be exhausted in 2037, four years earlier than the Trustees report last year,” said Secretary of Treasury Timothy Geithner at a press conference, in which he addressed the future of this program.
But these two entitlement programs will be consuming a disproportionately large amount America’s GDP in the near future, and need to be reformed now to stave off their demise, according to the report.
The main problem with these programs is that they are too expensive and will consume a disproportionately large part of America’s GDP.
“Medicare’s annual costs were 3.2 percent of GDP in 2008, or nearly three-quarters of Social Security’s,” said Geithner, “but are projected to surpass Social Security expenditures in 2028 and to reach 11.4 percent of GDP in 2083, compared with 5.9 percent of Social Security.”
As a result, Geithner stated that “the sooner action is taken the more options for reform will be available and the fairer reforms will be to our children and grandchildren.”
Some of the steps Geithner proposed involved lessening healthcare costs, which President Obama recently did by negotiating a $2 trillion reduction in costs, rehabilitating the economy so that more taxes can be placed into the fund, and to reform Social Security in a "responsible and bipartisan" manner.
Health and Human Services Secretary Kathleen Sebelius echoed Geithner’s need for reform. “The (Social Security Trustees) report was not a government report, but a wake up call,” said Sebelius.
Sebelius bluntly stated that the Medicare fund is spending more than it takes in, and uses assets accrued in the past to make-up the difference, but all of these excess assets will be exhausted by 2017.
Both Geithner and Sebelius stressed that reform of these two entitlement program need reform, and that the Obama Administration is dedicated to making this important change.
“Reform cannot wait,” said Sebelius.
But this change cannot come soon enough for Social Security and Medicare because the longer it takes for change, the more radically different the form will take, according to Geithner.