Thread by @kismets_pawn

@maziehirono 1/ Here's the thing @maziehirono, politicians have been talking about necessary changes to SS & Medicare for years, it's not suddenly happening now to pay for the tax cuts.

SS and Medicare benefits are paid for via 4 programs:
1. FICA (Federal Insurance Contributions Act)

@maziehirono 2/ withholds 6.25% for SS on the 1st $128.7k of annual payroll and Medicare at 1.45% for a total of 7.65% employee cost and employers also contributing 7.65% for a total contribution of 15.3% to FICA, 12.4% for the self-employed. Total rev from FICA taxes for 2017 was $905B in SS

@maziehirono 3/ and $275B in Medicare = $1.18T

2. Taxes on SS payments. SS benefits are non-taxable for couples with annual income =<$25k, 50% is taxable for those between $24 & $34k, and 85% is taxable for those =>$34k/yr. Total revenue from SS taxes was $37.9B in 2017.

3. This one is

@maziehirono 4/ difficulty for most to grasp. The 3rd source of revenue comes from interest earned, some of which is from interest earned on the social security and health insurance trust funds and some from treasury bonds sold. This is listed by the GAO and SSA as revenue, but it must be

@maziehirono 5/ offset by the interest paid to bond holders as those interest payments are paid using taxpayer dollars. And it shouldn't be included when figuring out the net overage/(shortfall) because T-bonds are not a stable income and as the years progress, the SS trust funds will

@maziehirono 6/ diminish and interest income along with it. Net revenue from interest was $88B for 2016, the latest year for which I could find data.

4. The last revenue category comes from the General Fund, coming from the federal budget, which is funded by income taxes, corporate taxes,

@maziehirono 7/ and revenue (individual and corporate taxes) from states. The GF payments are reimbursements.for funds borrowed from the trust fund throughout the programs history.

When considering medicare, medicare is only funded by payroll taxes and insurance premiums which only covers

@maziehirono 8/ 50% of reimbursements. Of the remaining, 6% is funded by interest earned on the HI Trust Fund with the remaining 42% funded by from the GF. Medicare benefits payments have nearly doubled in the past 10 years and per capita spending is expected to grow at a rate of 4.6%/yr over

@maziehirono 9/ the next 10 years due to increased enrollment. Because there are income caps for medicare taxes collected, a larger portion of payments each year is being funded by the GF. The Medicare HI trust fund is projected to be completely depleted by 2026.... 8 years from now.

@maziehirono 10/ The SSA & GAO estimate that the SS & Medicare trust funds revenue will exceed expenditures through 2021 when you include interest income and GF reimbursements and offsets; excluding interest income, it has run on a deficit since 2010. It is currently expected that the trust

@maziehirono 11/ fund will trend will revers starting, at the latest, in 2021 and expenditures will exceed revenues even if interest income is included. This deficit will continue to grow and SS will be insolvent by 2035.

The bigger issue is that the number of workers making tax payments to

@maziehirono 12/ cover each retiree has been steadily declining since the 1950's. In 1945 there were 45 workers to cover every retiree. But more people are having fewer children, living longer, and wages are increasing at a slower rate than the rate of growth in the number of retirees. As of

@maziehirono 13/ 2012, there were 2.9 workers to cover each retiree and that number is expected to drop to 2 workers per retiree by 2030. This is most likely what McConnell's comment refers to. But, even today, without a SS & Medicare trust fund deficit, neither are funded 100% by taxpayer

@maziehirono 14/ contributions and both are partially funded by the general fund which does make it a concern for the national debt, a fact that will only become more prevalent in coming years if no changes are made. /end

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