Washington — Last year's robust economy helped strengthen the financial health of Social Security and Medicare, offering an opportunity to pursue needed changes before the trust funds are depleted, the Bush administration said Monday.
"We have only so many years to get the systems back on track," President Bush said at a White House meeting with Hispanic business leaders. "It's time to quit the posturing and time to reform the systems."
The Social Security trust fund will not run out of cash until 2038, a year later than earlier estimated, and the Medicare trust fund will be exhausted only in 2029, a four-year extension from last year's estimate, Monday's annual report by the programs' trustees said.
It marked the fourth consecutive year the programs gained new years of life. The economy that created the growth, however, now is sputtering.
The programs, now running huge surpluses, face additional financial challenges as the aging baby boom generation begins to retire in the next decade.
"These nonpartisan reports underline and add an exclamation point to the need to reform and strengthen both," Bush said. "Social Security and Medicare are vital programs, and they need major reforms. We must act and do so courageously."
Last year's projections were more dramatic, adding 10 more years to Medicare, the health insurance program for the elderly and the disabled. Social Security, the largest federal benefit program, last year saw a three-year delay in the year it would exhaust its funds.
Treasury Secretary Paul O'Neill, one of three Bush Cabinet members on the trustees' board, said that recent stock market volatility should not affect when Social Security and Medicare run out of money, because those are 75-year projections.
"What is happening today almost doesn't matter," he said. The long-range forecasts are based on estimates of economic growth, employment and incomes in coming decades.
The new projections come as Republicans and Democrats battle over expanding the Medicare program, including potentially costly but politically popular prescription drug benefits.
Bush wants to overhaul the program to include competition from private health plans before extending benefits to all participants. Democrats prefer coverage for all participants with incremental reforms to ensure the program's future ability to handle the baby boomers, people born between 1946 and 1964.
The report pegs 2016 as the year that Social Security and Medicare will have to start dipping into their trust funds because they will no longer be taking in more money than they have to pay out.
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