Let's talk about Social Security, Medicare, and payroll taxes. [Thread]
FDR set up Social Security with a dedicated payroll tax. He reasoned that setting it up this way would help protect the system from attack. archives.gov/exhibits/treas…
FDR set up Social Security with a dedicated payroll tax. He reasoned that setting it up this way would help protect the system from attack. archives.gov/exhibits/treas…
Today, dedicated payroll taxes are relied upon to operate Social Security and *some of* Medicare. There are two Trust Funds associated with each of these federal programs. Social Security's Trust Funds are: OASI (Old-Age and Survivors Insurance) and DI (Disability Insurance).
Medicare's two separate Trust Funds are: Hospital Insurance (HI) and Supplementary Medical Insurance (SMI). Each year, the financial health of Social Security and Medicare is evaluated in the form of an Annual Report of the Trustees. ssa.gov/oact/TRSUM/
Because of the dedicated payroll tax, the Trustees (and others) can produce long-range forecasts like the one on the left. And they can point to the year in which the Trust Funds will be depleted (table on right). And this opens them up to constant attack.
According to the 2018 Annual Reports: OASI will be depleted in 2034, DI will be depleted in 2032, and HI (Medicare Part A) will be depleted in 2026. Unless something is done to shore things up, these programs cannot-under current law!-pay full benefits beyond those dates.
But what is this?!? The SMI Trust Fund (Medicare Parts B and D) faces no long-run financial problem. It is solvent into the indefinite future. How can that be? Well, it turns out it's because it is not dependent upon revenue from a dedicated payroll tax for its survival.
Putting this out there as food-for-thought now that the debate over how to "pay for" #Medicare-for-All is heating up. Personally, I'd go for the arrangement that gets you a clean bill of health in perpetuity. <end>
