MW Medicare will run out of money 12 years earlier than expected
By Brett Arends
The Congressional Budget Office warns America's public retirement programs are deteriorating at a shocking rate
The U.S. retirement system and the federal budget are in jeopardy.
Smart guy, that Donald Trump.
In this week's State of the Union address, the president pointedly said: "Under this administration, we will always protect Social Security and Medicare." The president, the survivor of countless negotiations with his long-suffering creditors, chose his words carefully. Yet the choice went generally unnoticed.
The subtext is that "this administration," under which the two programs will be supposedly protected, expires on Jan. 20, 2029.
After that, we're on our own.
The Congressional Budget Office this week revealed the shocking deterioration of America's public-sector retirement programs just during the first year of this administration. The CBO slashed by nearly half its forecast for how much longer the Medicare trust fund would last before running out of money.
A year ago, the CBO gave the fund another 27 years. Now? Try 15. The fund will be depleted by 2040, 12 years earlier than expected, the independent body said.
Oh, and let the record show that the CBO's forecast for the Medicare trust fund is noteworthy in Washington for being very optimistic. The actual trustees overseeing the Medicare trust fund think it will run out of cash much more quickly.
The trustees' last forecast, a year ago, put the depletion date at 2033. Their updated forecast, when it comes out later this year, should make for interesting reading.
Congressional Budget Office Director Phillip Swagel wrote on the CBO blog that Medicare's finances have been hit by the costs of President Trump's tax cuts. He also said: "We decreased our projections of revenues from payroll taxes to account for projections of lower earnings."
Those projections would mean lower earnings for U.S. workers. But they also reflect lower payroll taxes caused by the deportation of at least 2.5 million people who were here illegally.
Whatever you think of "illegal" or "undocumented" or "other-than-lawful" immigration generally, it is an established fact that those here illegally have been net contributors to Social Security and Medicare. Many of them paid in - using fake Social Security numbers - but could not claim benefits when they retired. Therefore, the massive reduction in the number of illegal immigrants in the U.S. has a net negative effect on the finances of these two programs.
(Incidentally, a new RAND study also reports that last year's big, "beautiful" tax-cut bill will also cut $664 billion from state Medicaid budgets between now and 2034.)
Meanwhile, as recently reported by MarketWatch's Jessica Hall, the Congressional Budget Office also recently issued a new warning about Social Security. It now fears the program's trust fund could run out of money in as little as six years.
As Police Squad's Frank Drebbin said, while standing in front of an exploding fireworks factory: "Nothing to see here, folks. Please disperse."
But it's not just the U.S.'s retirement programs whose financial pictures are getting worse. It's also the rest of the federal budget, on whom those programs will eventually depend for any bailout.
The CBO projected the Trump administration would add another $7.7 trillion to the national debt over the next four years, and that was before the Supreme Court threw out his revenue-generating tariffs.
The president this week promised that an antifraud campaign led by Vice President J.D. Vance would root out so much fraud in the federal budget that it would balance the budget without any pain to any U.S. citizens.
"I am officially announcing the war on fraud to be led by our great Vice President J.D. Vance," he said. "He'll get it done. And we're able to find enough of that fraud, we will actually have a balanced budget overnight. It'll go very quickly. That's the kind of money you're talking about. We'll balance our budget."
One of the features of a culture with the brains of a goldfish is that it also has the memory of a goldfish. People cheering the president's latest announcement have probably completely forgotten that a year ago, the president also launched a massive antifraud campaign called DOGE headed by one of the world's most successful CEOs, Tesla $(TSLA)$ boss Elon Musk. That, too, was going to uncover trillions of dollars in fraud - free money - and balance the budget without any pain.
Remember that? Remember the promises? Remember the chainsaw?
Instead, U.S. federal spending just went up another $400 billion, or 6%, to $7.4 trillion.
When Vance's antifraud campaign fails to balance the budget by finding those mythical trillions of dollars in fraud, a year from now, President Trump will be able to stand up at the State of the Union address and announce a new antifraud campaign that will magically balance the budget - possibly led by Commerce Secretary Howard Lutnick, or Treasury Secretary Scott Bessent, or Trumpy PayPal billionaire Peter Thiel, or Kermit the Frog.
And the same people cheering now can cheer again then.
The federal budget deficit was $1.78 trillion last year and is expected to rise to $1.85 trillion this year, equal to 5.8% of the U.S. economy.
The president promised his base he would achieve these savings by getting rid of the massive fraud in the states they hate, including California, Massachusetts and fresh target Minnesota.
Sadly, the federal budget deficit is more than three times the entire gross state product of Minnesota. So, good luck with that.
Incidentally, the states that the president cites as the big sources of future savings are actually the reverse: They are net contributors to the federal budget. The residents of California, Massachusetts, Minnesota and other communist states like New York and New Jersey pay tens of billions more in federal taxes than they get back in benefits.
Good times. Meanwhile, keep saving for your retirement as hard as you can. You may need every nickel.
-Brett Arends
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(END) Dow Jones Newswires
February 27, 2026 13:16 ET (18:16 GMT)
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