Two government reports issued on May 6 warn that Social Security and Medicare face insolvency within a decade, The Washington Post reported.

The trustees for both programs project that Social Security will be insolvent by 2035, and Medicare by 2036, which could force benefit cuts. Those projections are actually a little rosier than the ones from last year's reports, which predicted that the insolvency of the programs would come sooner.

An increase in the federal debt and an aging population, placing increasing demands on retirement services, make congressional action necessary, the report warned. Otherwise, trillions of dollars will need to be raised, possibly through tax increases.

“Next year will be filled with unavoidably huge fiscal moments, including the expiration of the tax cuts and the need to increase the debt ceiling, at the same time that the fiscal picture is likely to continue to deteriorate," said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, in an interview with the Post. "This presents a perfect opportunity to actually tackle a number of these big issues as they become increasingly impossible to ignore.” 

Neither President Joe Biden nor former President Donald Trump have released proposals to stabilize Social Security’s finances. Biden has suggested raising taxes on individuals earning more than $400,000 and devoting that new revenue to the Social Security Trust Fund. He has stated his opposition to cutting social safety net benefits.

If all of the provisions of the 2017 Tax Jobs and Jobs Act, scheduled to expire at the end of 2025, were to be extended, that would add $3 trillion over the next decade to the nation’s $28 trillion in publicly held debt.

Biden and Congress have negotiated over discretionary spending, which accounts for a little less than a third of the money the federal government spends, according to the nonpartisan Congressional Budget Office. The vast majority of the federal government’s spending is on mandatory programs, such as Social Security, Medicare and veteran’s benefits, known as entitlements. The United States spent $2.9 trillion on Social Security and major heath-care programs in the 2023 fiscal year, according to the Congressional Budget Office (CBO). That amount is nearly twice as much as Congress spent on the entire discretionary budget.

“If you can’t deal with your allowance, your pocket change, which is the discretionary part, how are you going to deal with the bigger issues? I just don’t think these people are ready to do it,” Rep. Thomas Massie (R-Ky.) said to the Post. “It would probably take some kind of crisis moment to get their attention.”

The so-called silver tsunami, the beginning of a wave of Baby Boomer retirements, is draining the trust fund’s resources. More than 11,000 Americans will turn 65 every day between 2024 and 2027, according to the Retirement Income Institute at the Alliance for Lifetime Income. That’s 4.1 million potential new beneficiaries each year, forcing the social safety net to pay out far more than it brings in from younger workers.

Without significant changes, Social Security benefits would face a mandatory 23 percent cut by 2034. Nearly one in five seniors relies on Social Security for at least 90 percent of their income, according to the Social Security Administration.

“I think the public wants to see a fairer tax code, and I think the public wants to see Social Security and Medicare made secure. And you put those two pieces together, I think you’ve got a winner,” Senate Budget Committee Chairman Sheldon Whitehouse (D-R.I.) told the Post.

One proposal to fix the situation would be cutting benefits, including raising the retirement age—known as the “third rail of politics because of the pain it would cause for retirees. Another would be raising Social Security payroll taxes. Or there could be a combination of both, with a more modest benefit cut and payroll tax increase. “You can make some changes now that don’t have to be as drastic, but we’re starting to get closer to that point where if we make some changes to the benefits side, they might not kick in soon enough,” said Joel Eskovitz, senior director for Social Security and savings at AARP Public Policy Institute, in an interview.

The closer the programs come to insolvency without addressing the underlying budget math, the higher the odds that Congress will just have to authorize more borrowing to pay for benefits, said Brian Riedl, senior fellow at the Manhattan Institute.

That would increase the federal debt, experts warned. The $21.2 trillion in new borrowing, according to 2023 projections, would force interest rates much higher on U.S. bonds, said Jason Fichtner, chief economist at the Bipartisan Policy Center think tank. That could lead to debt that would grow too quickly for the United States to ever pay it off.

That could happen; Congressional forecasters projected the U.S. gross domestic product to grow by 2.2 percent in 2025, while the yield on the 10-year Treasury note is already double that, at  around 4.5 percent.