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 Prepared Remarks of Secretary Steven Mnuchin Spring 2017 Meeting of the Social Security and Medicare Board of Trustees


7/13/2017

Good Morning. It is a pleasure to be here today and I would like to welcome everyone to Treasury.

We have just finished the meeting of the Boards of Trustees for Social Security and Medicare. These are the two largest programs of the federal government and this is a responsibility I take very seriously. Before I begin, on behalf of all the trustees, I would like to thank the chief actuaries Stephen Goss and Paul Spitalnic and their offices for all of the work that went into producing these reports.

I'd like to briefly discuss the key findings of the reports here – afterwards we will have a technical briefing with the chief actuaries and representatives of the trustees.

I want to begin by saying that these programs are secure and will remain secure. They face certain long-term issues, but it is projected that full scheduled benefits will be payable to 2028 for Social Security disability insurance, 2035 for Social Security retirement and survivors insurance, and 2029 for Medicare Hospital Insurance.

On a combined basis, Social Security's retirement and disability trust fund reserves will have positive reserve balances to 2034. This is the same date projected in last year's Trustees Report. After trust fund depletion, annual revenues from the dedicated payroll tax and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2091.

Turning to the Disability Insurance Trust Fund – this program is projected to pay full scheduled benefits to 2028, five years later than was projected last year. This is because of a lower-than-expected number of beneficiaries. Since 2010, the number of disability applications has been declining and since 2014, the number of disabled worker beneficiaries has also been falling. Nonetheless, this year's projections for the retirement Trust Fund and combined retirement and disability Trust Fund depletion dates are unchanged, and the estimated magnitude of long-term financial imbalances is little changed for disability and is larger for the combined programs.

The Medicare Hospital Insurance Trust Fund is projected to have sufficient funds to cover its obligations until 2029, one year later than projected last year.  The projected portion of scheduled benefits that can be financed with dedicated revenues is 88 percent in 2029, declines to 81 percent in 2041, and then gradually increases to 88 percent in 2091.

Part B of Supplementary Medical Insurance (SMI), which pays doctors' bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future. This is because current law automatically provides financing each year to meet the next year's expected costs.  However, the aging population and rising health care costs cause SMI projected costs to grow steadily from 2.1 percent of GDP in 2016 to 3.4 percent of GDP in 2037, and then more slowly to 3.7 percent of GDP by 2091. Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries.

Tens of millions of Americans rely on these programs and it is important that we ensure their long-term stability. A combination of an aging population and tepid economic growth has produced the projected short-falls for both Social Security and Medicare.

To help make these programs sustainable into the future we should focus on strengthening the economy today. Compounding growth will help ease projected short-falls. To this end, it is essential for us to implement tax and regulatory reform. A return to a normalized level of 3% or higher GDP growth means trillions of dollars into the economy and additional revenue to meet our obligations. Persistent and strong economic growth can help bring these programs to sustainable solvency. This is why the Administration's program for economic growth is so important.            

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