We read the Social Security and Medicare trustees reports. If you're not worried, you should be.

By Brett Arends

The truth about 'DOGE' savings, no tax on Social Security, immigration - and more

Social Security beneficiaries will pay $57 billion in these nonexistent taxes this year.

You, I and pretty much everyone we know will depend in our golden years, to a greater or lesser degree, on Social Security for income and Medicare for healthcare. The trustees of the two programs have just published their annual reports, detailing everything from current costs to future forecasts. The reports in total run to 545 pages.

It's a lucky thing for those in power that hardly anyone reads anymore-and certainly not 545 pages. There are reasons they don't put the highlights on TikTok. But here at MarketWatch, we wade through these things so you don't have to. And oh boy, are they doozies. If you're not worried, you should be.

Forget all that talk about the two programs' "trust funds" supposedly "running out of money" in six or eight years. In real terms this has already happened. Social Security and Medicare have already run out of their own dedicated resources - mainly payroll taxes - and are dependent on Uncle Sam for annual bailouts.

Last year that ran to $765 billion - yes, really. You can see the figure in Table V.F1 of the Medicare trustees report on page 216 in the appendix-right where taxpayers are all sure to see it. The bulk of that extra money goes to Medicare parts B (doctors and outpatient services) and D (drugs), which are not supported by payroll taxes at all, but $203 billion of it went to Social Security.

All these numbers are rising dramatically. You can see why some people were so eager to pretend that, like leprechauns, they had discovered a giant pot of gold at the end of the budget rainbow labeled "waste, fraud and abuse" and supposedly containing at least $1 trillion a year in free money. (What is less clear is why anyone over the age of 8 believed them, but that's a story for another day.)

Speaking of trillion-dollar leprechauns, you will hunt through all 545 pages in vain for those big "DOGE" savings you were promised. Social Security spent $1.46 trillion in 2024, during the final year under the big-spending communist Joe Biden. Since then? Last year the figure went up by $120 billion, to $1.58 trillion. This year it is on track to spend even more, $1.67 trillion, and by 2030 it is expected to hit $2 trillion. That would be over $500 billion more than under "Crooked Joe" and "Crazy Kamala." If you don't believe me and think this is "fake news," check table VI.C.6 on page 193 of the Social Security Trustees Report - which was signed by three of President Trump's cabinet secretaries, including Treasury Secretary Scott Bessent.

The story is the same over at Medicare. From 2024 to 2025, the program cost jumped $90 billion, from $1.12 trillion to $1.21 trillion. (See table V.B1 on page 186 of the Medicare trustees' report - again, right where everyone will see it.) It is on track to rise another $120 billion this year, to $1.33 trillion, and to hit $1.8 trillion by 2030.

Perhaps these look like big savings from space, or if you're high on ketamine, or both?

Do you remember all the big talk from Washington last year about ending the taxation of Social Security benefits? I sure do. There was more talk about it earlier this year, at a political rally in The Villages, a 55-and-older community in Florida.

Alas, you will be shocked to hear that the reality is very different. The Social Security trustees report that beneficiaries are expected to pay $57 billion in taxes on their Social Security benefits this year, $67 billion next year and $75 billion in 2028. All of those figures are higher than the $54 billion that Social Security beneficiaries paid in taxes on their benefits in 2024, Joe Biden's last year in office.

I asked the White House to explain this peculiarity. "President Trump proudly delivered No Tax on Social Security for nearly every senior in America despite every single Democrat in Congress voting against it," spokeswoman Liz Huston replied.

(For clarification, the GOP tax law known as the One Big Beautiful Bill Act last year introduced a temporary $6,000 extra tax deduction for people over 65, and this reduced the number of people paying taxes on their Social Security benefits. But, as the trustees report, it did not end those taxes. Not even close.)

You may also remember big talk - last year and this year - that cutting back on immigration, ending illegal immigration and expelling illegal immigrants would improve the finances of these programs. Alas, you will be shocked to learn that here, too, the reality seems to be different. "When total net immigration increases, the cost rate decreases," report the trustees of the Social Security Administration on page 198. Table VI.D3 shows that the higher the net level of immigration, the better Social Security's finances are.

"The cost rate decreases with an increase in total net immigration because immigration occurs at relatively young ages, thereby increasing the number of covered workers earlier than the number of beneficiaries," the trustees report. "Increasing average annual total net immigration by 100,000 people increases (improves) the long-range actuarial balance by about 0.10 percent of taxable payroll."

Hmmm ... so if more immigrants are good for the program, how many should we expel to rescue its finances?

Meanwhile, the reports clarify the scale of the funding challenge for America's retirement programs in an era of longer life expectancy. Traditionally, the trustees of both programs estimate the funding gaps, the so-called "unfunded obligations," over a 75-year window. But people who are born today, and indeed those who are now in their 20s or even 30s, may live longer than 75 years on average. So, buried in the reports are also heroic estimates of the all-time or "infinite horizon" funding gap.

This year, the trustees reckon that figure at $243 trillion in today's money. (Just under a third of that, $71.9 trillion, would be for Social Security. Most of the rest would be for Medicare Part B, which is almost entirely financed out of general taxation.) That's the present value of all the extra money, on top of payroll taxes, Medicare premiums and benefits taxes, that taxpayers will need to find in the future to keep these programs going on their current basis. (And it understates some of the problem, because this assumes Social Security cuts, under current law, starting in 2034.)

On the other hand, the trustees also calculate that all future U.S. economic output - our national gross domestic products from today until the end of time, converted into present-day dollars - is $3,818 trillion, or $3.8 quadrillion. So the funding challenge over an infinite time horizon works out at around 6% of future gross domestic product. That's substantial, but hardly impossible.

Is the situation fixable? A look through the reports shows that of course it is, depending on what choices we are prepared to make. But one thing's for certain: It's going to take solutions, not slogans.

-Brett Arends

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06-20-26 1420ET