The Congressional Budget Office (CBO) recently released a pair of reports offering options for reducing the federal budget deficit that could provide a roadmap for lawmakers to save Social Security, Medicare and the Highway Trust Fund from becoming insolvent over the next decade.
According to CBO's projections from last year, the three major trust funds will be tapped out over the next 10 years – the Highway Trust Fund will be exhausted in 2027, Medicare's Hospital Insurance Trust Fund in 2030, and Social Security's Old-Age and Survivors Insurance Trust Fund in 2033. Updated estimates will likely be provided in the weeks ahead as the CBO releases new budget forecasts.
Once those trust funds are exhausted, the programs they help finance will have to rely solely on incoming tax revenue and reduce spending unless Congress takes action as it has in the past to shore up the trust funds. If the trust funds become insolvent, Social Security benefits would be cut by a projected 23%, Medicare's hospital spending by 10%, and highway spending by 45%.
BIPARTISAN TRUST ACT AIMS TO SHORE UP SOCIAL SECURITY, MEDICARE, HIGHWAY TRUST FUNDS
The CBO's reports on large and small options for deficit reduction were compiled by the nonpartisan Center for a Responsible Federal Budget (CRFB) into a report that identified a number of ways to increase tax revenue and decrease or reform spending over the next decade to extend the solvency of the endangered trust funds. Here's a look some of the notable options presented to close the budget gaps:
Also known as Medicare Part A, the Medicare Hospital Insurance (HI) Trust Fund's insolvency looms in 2030 but could be extended through the following policies identified by CBO and CRFB:
MAJOR SOCIAL SECURITY TRUST FUNDS COULD BE TAPPED OUT BY 2033: CBO
The projected insolvency of Social Security's Old-Age and Survivors Insurance Trust Fund in 2033 could be delayed through the following policy options analyzed by CBO and CRFB:
Adopting a flat benefit between 125% and 150% of the federal poverty line (FPL) would close about one-third of the 2032 gap and fully restore Social Security's solvency over the next 75 years:
The exhaustion of the Highway Trust Fund is projected to occur in 2027 but could be pushed back with the following reforms identified by CBO and CRFB:
