More bad news for Medicare, Social Security

New York Times May. 2, 2006 12:00 AM

WASHINGTON - The financial condition of Medicare and Social Security, the two largest federal benefits programs, deteriorated in the past year, the Bush administration reported Monday, and it warned again that they are unsustainable in their current form.

Medicare's hospital insurance trust fund, a widely watched gauge of the program's solvency, will run out of money in 2018, two years earlier than projected in last year's report, trustees said.

And the Social Security trust fund will be exhausted in 2040, one year earlier than projected last year, the trustees said. At that point in 2040, Social Security tax collections could pay only 74 percent of scheduled benefits.

Lawmakers said they will never allow the trust funds to run dry. But to keep them solvent, Congress would need to trim benefits, raise taxes or take some combination of such steps