The economic recession and resulting huge job losses are bringing great pressure to bear on Social Security and Medicare funds, reducing revenues far below previous projections, U.S. officials are warning.
They project that Social Security will run out of funds in 2037, four years earlier than last year's estimate, and that Medicare will be insolvent in 2017, two years earlier than last year's estimate and just eight years out, United Press International reported. To head off a funding shortfall, the Obama administration has proposed raising payroll taxes 2 percentage points to 14.4 percent or reducing benefits by 13 percent, or some combination of both ideas.
None of the options appears palatable, however, since raising payroll taxes would be unpopular and break a key pledge Obama made during his election campaign, the officials said. Additionally, Social Security trustees said a cut in benefits is unlikely to pass because of backlash from politically powerful groups such as AARP, UPI reported.