The revelation, detailed in the Financial Report of the United States Government, casts a long shadow over the nation's fiscal future, with Treasury Secretary Janet Yellen stating that America’s current policies are “not sustainable and must ultimately change.” Adam Andrzejewski, who analyzed the financials for Open the Books, a government watchdog agency he co-founded, amplified Yellen’s concerns warning, “that amount is unfathomable.” He provided two examples that place that unfunded liability in context:In an alarming recent report by the U.S. Treasury Department, Social Security and Medicare programs are shown to be underfunded by more than $173 trillion.
Under federal law, Social Security and Medicare constitute mandatory expenditures, necessitating annual budgetary allocations by the U.S. government. However, projections within the Treasury's report suggest a bleak outlook, estimating expenditures of $215.7 trillion over the next 75 years against anticipated revenues of $137.4 trillion. “The $78.3 trillion funding gap? According to the Yellin Report, it can only be generated through increased borrowing, higher taxes, reduced benefits, or some combination of these,” warns Andrzejewski. “All options are politically toxic, which is why Congress is hiding, hoping the problem will go away. And why no one in Washington DC wants to talk about the Yellin Report.” Social Security and Medicare have long been considered political landmines, which has deferred conversations about how to address solvency issues for politicians wary of the electoral repercussions tied to discussions about reforming these programs. Andrzejewski continues:
It gets worse: the Yellin Report honestly tells us that the 75-year projection underestimates just how much extra cash is needed because that period does not include the years when most Social Security and Medicare dollars will be paid out. Think about it. A child born today will pay massive taxes into Medicare and Social Security over the next 75 years. But the government will not have to send that person benefit checks until they are 62 years old, meaning the majority of payouts will occur more than 75 years from now. Since this “infinite horizon” model covers an individual’s entire life, this model exposes even more funding gaps. The Treasury estimates that current participants will use $105.4 trillion more from Medicare and Social Security than those same people pay into the programs through taxes. “Future” participants, who are now younger than fifteen or even still in the womb, will use $69.9 trillion more than they contribute. Combined, that is an absurd $175.3 trillion gap that Congress has been ignoring. He also outlines three bipartisan reforms Congress can enact to help mitigate this problem:
