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Fiscal Policy: Social Security and Medicare

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Social Security and Medicare
Currently the Social Security Trust Fund is in a surplus, more monies are contributed to the fund then going out to beneficiaries. However, as the number of retirees increase and the number of workers decrease the Social Security Trust Fund becomes depleted quickly, in other words a deficit is created. The future for Social Security is going to have to borrow monies to continue with the current benefit structure, will have to restructure the benefit package, or possibly raise the retirement age to accommodate the increase in beneficiaries, to name a few possible changes. Social Security is far from a crisis but the state of Social Security is headed towards a deficit and into debt. It is estimated that Social Security will continue with a surplus until 2020 and eventually depleting around 2040 (Colander, 2010). The U.S. government is going to have to make adjustments to the current system to ensure that funds will continue to be available to future retirees.
Along with the Social Security future going from surplus to deficit and debt is the growing concern of Medicare. As of 2004 Medicare funding by the U.S. government has been increased with the expansions of coverage (Colander, 2010). The growing rate of retirees and the need for medical care and drugs has increased. The future of Medicare is uncertain as medical expense increase and the amount spent per individual using Medicare increases funding is utilized faster. Funding for Medicare will eventually have to be borrowed to continue to fund the increasing costs.
The budgets for Social Security and Medicare will need to be increased for the future. According to Macroeconomics, “it has been estimated that in 2030, 60 or even 65 percent of government budget will spent on Social Security and Medicare, compared to the current 35 percent” (p. 423). This is alarming considering we are currently in a surplus with Social Security.

Reference:
Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.

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