- Americans face Social Security benefit cuts in 2035 unless Congress intervenes.
- Medicare's finances are in dire shape with full hospital benefits running dry in six years.
- Biden said he's up to negotiate on how to secure the future of Social Security and Medicare.
Social Security will be unable to pay full benefits to retirees starting in 2035 if Congress doesn't step in, according to an annual federal report released on Thursday.
The Social Security and Medicare trustees said that the program's financial status improved slightly since last year. Social Security will keep issuing monthly checks to elderly and disabled Americans for about 13 years until the trust fund dries up and those benefits are cut. It's an extra year compared to last year's projection from the trustees due to the strong economic rebound from the pandemic.
"This latest report shows an improvement in the financial position of Social Security and Medicare, reflecting the strong economic recovery and growth in the last year," Treasury Secretary Janet Yellen said in a statement. "However, in the coming decades it will be vital for Congress to take steps to put Social Security and Medicare on solid financial footing for the long term."
If Congress does nothing to strengthen the program's finances, payroll taxes would replace the Social Security trust fund as the main method to pay for it. But that would only finance 77% of all benefits owed to retirees, prompting the benefit cuts.
By comparison, Medicare's outlook is more grim. The hospital insurance trust fund — otherwise known as Medicare Part A — that covers hospital visits and hospice care will be able to pay full benefits only until 2028. That's two more years than projected last year due to an increase in payroll taxes flowing from workers.
Republicans and Democrats fiercely disagree on how to shore up the finances of Social Security and Medicare. The GOP tends to favor cutting benefits for future retirees or raising the retirement age. Democrats generally back higher taxes on richer Americans to expand the revenue going to both programs.
Sen. Joe Manchin, Democrat of West Virginia, earlier in the year floated raising the income threshold subject to Social Security taxes to $400,000 from its current level of $147,000.
President Joe Biden said he'd be willing to negotiate on how to secure the future of Social Security and Medicare down the road.
"I will work with anyone willing to have an open and honest conversation about growing our economy, bringing down inflation, improving our fiscal position, and strengthening the programs that millions of Americans rely on," Biden said in a statement.