CBO warns Social Security, Medicare and Highway Trust Funds will be 'exhausted' within 10 years
According to CBO projections, federal spending from the trust funds is 'projected to exceed income by $18 billion in 2021, a deficit that grows to $502 billion by 2030'
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The balances in three federal trust funds — Social Security, Medicare and the Highway Trust Fund — will be "exhausted within the next 10 years" without congressional action, the Congressional Budget Office warned Wednesday.
"If the Congress did not take action to address the shortfalls, CBO projects, the balances in three trust funds would be exhausted within the next 10 years: the Highway Trust Fund (in fiscal year 2021), Medicare's Hospital Insurance (HI) Trust Fund (in fiscal year 2024), and Social Security's Disability Insurance (DI) Trust Fund (in fiscal year 2026)," according to the CBO's report, titled "The Outlook for Major Federal Trust Funds: 2020 to 2030."
The nonpartisan CBO stated that the projections for deficits were "revised upward in part because of the economic disruption stemming from the 2020 coronavirus pandemic, which reduced CBO's estimates of payroll tax revenues."
"No provisions in law dictate the funds' procedures once their balances are depleted. However, if that happened, excise and payroll taxes designated for the funds would continue to be collected, and the funds would continue to make payments, but they would not have the authority to make payments in excess of receipts. Thus they would no longer be able to pay amounts as projected under current law," the report also states.
The CBO projects that the balances held by the federal trust funds are going to "fall by $43 billion in fiscal year 2020," which is $100 billion lower than the $57 billion surplus the agency had originally estimated back in January of this year.
"The change in CBO's estimate was largely driven by an increase in payments made by the Unemployment Trust Fund as the number of beneficiaries increase," the CBO also reported.
According to the CBO's latest projections, federal spending from the trust funds is "projected to exceed income by $18 billion in 2021, a deficit that grows to $502 billion by 2030."
Looking at the 2021-2030 period, the CBO estimates a "cumulative trust fund deficit of $2.3 trillion," which is 6% larger than "the $2.2 trillion deficit that the agency estimated in January 2020."
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