The recent analysis by the Committee for a Responsible Federal Budget regarding the 2025 Medicare Trustees’ Report highlights the looming challenges with Medicare and Social Security, but it only scratches the surface of the deeper fiscal issues our country faces. To understand the full financial reality, we must go beyond trust fund “solvency” and examine the actual commitments the federal government has made—and continues to make—without fully accounting for them.
As the Congressional Budget Office has noted:
“In the public debate, ‘solvency’ means keeping the trust funds from exhausting their balances and ensuring the ability of the funds to finance promised benefits. Defined that way, however, trust fund solvency is not a meaningful measure of the government’s ability to meet its future obligations.”
In other words, solvency in this context is more of a political or legal benchmark than an actual measure of financial health.
The more alarming reality is how much these programs consume of the federal budget. In 2008, spending on Social Security and Health and Human Services (including Medicare) made up 38% of the federal budget. In 2024, that share has grown to 44%, crowding out other priorities and worsening the deficit.
Despite this, Congress continues to make benefit promises without a full understanding—or accounting—of their long-term costs. For example, lawmakers recently expanded Social Security coverage to additional workers without fully assessing the impact on the already strained and largely symbolic trust funds. This is like buying a car knowing only the monthly payments, without understanding the total cost or whether you’ll be able to pay it off.
One of the clearest signs of how disconnected federal accounting is from reality lies in the federal balance sheet itself. According to the Treasury Department, only $241 billion of liabilities for Social Security and Medicare are included in official federal financial statements. This is a tiny fraction of the real financial picture: Social Security carries over $50 trillion in unfunded promises, while Medicare’s unfunded obligations exceed $60 trillion.
Why is this massive gap ignored in the financial statements? Because, as Steve Goss, Chief Actuary of Social Security, explained:
“An overriding uncertainty exists under the Social Security (and all Federal Social Insurance) programs. This is the Government’s right and ability to alter potential future benefits. Until benefits become due and payable, there is no binding commitment over which a worker has control and so no liability can be recognized.”
In plain terms, the federal government is not legally liable to pay any Social Security or Medicare benefits beyond the checks due next month. These are political promises, not binding obligations—yet millions of Americans base their retirement planning on the assumption that these promises will be honored.
Even the very concept of “trust funds” is misunderstood. The Treasury Department clarifies:
“In the federal budget, the term ‘trust fund’ means only that the law requires a particular fund be accounted for separately, used only for a specified purpose, and designated as a trust fund. A change in law may change the future receipts and the terms under which the fund’s resources are spent.”
This differs drastically from the private sector, where trust funds involve a fiduciary duty to manage someone else’s money for their benefit. In government, trust funds are little more than internal bookkeeping entries that Congress can change at any time.
At Truth in Accounting, we believe the public and lawmakers deserve honest, complete, and transparent accounting. That includes recognizing the full cost of Social Security and Medicare, understanding the long-term implications of policy changes, and being honest about what has been promised—and what has not.
Until we do so, we are not just engaging in poor financial management—we are undermining the American people's trust and passing unsustainable burdens onto future generations.