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In less than a year, Trump erased 12 years of solvency for the trust fund that pays for Medicare Part A


Nick Lichtenberg

Mon, February 23, 2026 at 1:54 PM CST

Donald Trump’s One Big Beautiful Bill Act significantly reduced the revenues the trust fund normally receives from taxing Social Security benefits.

Recent policy changes and economic shifts have slashed 12 years off the projected life span of the trust fund that pays for Medicare Part A, according to a newly updated report from the Congressional Budget Office (CBO). The Hospital Insurance (HI) Trust Fund is now slated to be entirely exhausted by 2040, even though the balance generally increases through 2031, as spending will begin to outstrip income in the following year.

This rapid deterioration of Medicare’s financial solvency represents a stark drop from the CBO’s previous estimate, which was published just last year, in March 2025. The dramatically shortened timeline means future retirees could face significant cuts to vital health care services far sooner than previously anticipated. As required by the Deficit Control Act, CBO Director Phillip Swagel noted the projections reflect the assumption benefits would be paid as scheduled even after the HI trust fund was exhausted.

The primary culprit for this accelerated depletion is a sharp reduction in the fund’s projected income, heavily driven by legislation passed over the last year. Specifically, the 2025 reconciliation act (Public Law 119-21, more commonly known as the One Big Beautiful Bill Act) significantly reduced the revenues the trust fund normally receives from taxing Social Security benefits. This legislation lowered tax rates and established a temporary deduction for taxpayers age 65 or older. Consequently, this major policy shift enacted during the Trump administration has directly contributed to starving the Medicare safety net of critical future funding.

What is the HI trust fund?

The HI trust fund is the financial backbone for Medicare Part A, which covers essential services including inpatient hospital care, stays in skilled nursing facilities, home health care, and hospice care. Over the next 30 years, the fund is expected to rely on the Medicare payroll tax for about three-quarters of its annual income, with another roughly one-eighth derived from income taxes on Social Security benefits.

However, the recent tax cuts are not the only factor draining the fund. The CBO also cited decreased projections for payroll tax revenues, warning it had to adjust their models to account for lower expected worker earnings. Furthermore, because the trust fund will have smaller balances going forward, it will generate less interest income, creating a compounding negative effect on its overall finances.

On the other side of the ledger, Medicare spending is rising faster than anticipated. The CBO noted per-enrollee spending in Medicare Part A’s fee-for-service program in 2025, along with 2026 bids by Medicare Advantage plan providers, both came in higher than expected.

The consequences of the fund’s exhaustion in 2040 would be severe for both seniors and health care providers. By law, if the trust fund runs dry and spending continues to exceed income, Medicare would be legally restricted to paying out only what it takes in. To make up the shortfall, total benefits would need to be slashed. The CBO estimates these benefit reductions would start at 8% in 2040 and steadily climb to a 10% cut by 2056. It currently remains unclear exactly how the Centers for Medicare & Medicaid Services would manage the program under such dire financial constraints.

Addressing this looming crisis will require significant legislative action. The fund currently faces a 25-year actuarial deficit of 0.30% of taxable payroll—a figure representing the total amount of earnings subject to the payroll tax. This deficit is 0.17 percentage points worse than last year’s projection. To eliminate this deficit and restore the 12 years of solvency lost over the last 11 months, lawmakers will be forced to increase taxes, reduce health care payments, transfer money into the trust fund, or implement a combination of these politically fraught approaches.

Notably, these already grim baseline projections remain highly uncertain and do not yet account for the potential economic or budgetary fallout from the recent Supreme Court ruling on tariffs (Learning Res., Inc. v. Trump, issued on February 20, 2026).

This story was originally featured on Fortune.com

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Social Security’s main trust fund could be depleted a year earlier than expected, according to a projection from the Congressional Budget Office (CBO) released earlier this month.

The CBO forecasts that the Old-Age and Survivors Insurance Trust Fund — one of the two funds Social Security taps to disburse benefits — will be exhausted in 2032. The agency, which provides budgetary analysis to Congress, estimated last year that the trust fund would run dry in 2033.

Although the Social Security Administration wouldn’t stop administering benefits if the trust fund reserves are depleted, the agency could be forced to trim the amount it pays to beneficiaries, according to experts.

“My takeaway from all of this is we don’t have much time to spare to address the shortfall,” Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, a nonprofit advocacy group. “If there’s not enough revenue coming in payroll taxes — and I don’t see that changing — benefits are going to be cut dramatically.”

The Social Security Administration did not respond to a request for comment.

Why CBO changed its forecast

The CBO changed its Social Security funding projection after updating its economic forecast, which predicts hotter inflation in the coming years. That could affect Social Security’s annual cost-of-living adjustment (COLA), which is aimed at ensuring that inflation doesn’t erode beneficiaries’ purchasing power.

Higher inflation could mean a larger COLA, which would draw down the trust fund more quickly. The CBO forecasts a COLA of 3.1% for 2027, on the higher end of projections. The agency announced a 2.8% COLA for 2026.

The CBO also projects Social Security trust fund income will be lower because of a reduction in individual income taxes and payroll taxes.

Diminishing trust fund reserves

The Social Security Administration started tapping into the trust fund reserves in 2021, when the total cost to provide benefits started to outpace the agency’s income. Social Security, which is funded chiefly through payroll taxes paid by workers and employers, is facing greater financial strains as the U.S. population ages and more people claim retirement benefits.

It’s Interesting How Truth Social Moved to Sell Stock Right Before Trump’s Tariffs Were Announced


 

Victor Tangermann

Thu, April 3, 2025 at 1:47 PM CDT

3 min read

260

Just before announcing a major escalation in his tariff war on Wednesday evening — followed by a major stock market wipeout the following morning — president Donald Trump freed up the sale of his Truth Social shares.

As the Financial Times reports, Trump Media and Technology Group (TMTG) revealed that it was planning to sell more than 142 million shares in a late Tuesday filing with the Securities and Exchange Commission.

Most notably, the shares listed in the document include Trump’s 114-million-share stake, which is worth roughly $2.3 billion and held in a trust controlled by his son Donald Trump Jr. Other insiders, including a crypto exchange-traded fund, and 106,000 shares held by US attorney Pam Bondi were also included in the latest filing.

While the filing doesn’t guarantee any future sale of shares, investors weren’t exactly smitten with the optics. Shares plunged eight percent in light of the news, according to the FT, and are down over 45 percent this year amid Trump’s escalating trade war.

The timing of the SEC filing is certainly suspect. Trump’s “liberation day” tariff announcement on Wednesday triggered a major selloff, causing shares of multinational companies and stock futures to crater.

Trump also vowed in September that he wasn’t planning to sell any of his TMTG shares, which caused their value to spike temporarily at the time.

Now that the shares are up for grabs, the president has seemingly had a change of heart — or, perhaps, is getting cold feet now that the economy is feeling the brunt of his catastrophic economic policymaking. It’s also possible Trump was always planning to cash out and leave investors exposed.

Meanwhile, Trump Media released a statement on Wednesday, accusing “legacy media outlets” of “spreading a fake story suggesting that a TMTG filing today is paving the way for the Trump trust to sell its shares in TMTG.” The company said this week’s filing was “routine.”

Experts have long pointed out that if Trump were to sell, it could lead to TMTG spiraling.

It’s still unclear whether the company — which reported a staggering $400 million loss in 2024, while only netting a pitiful $3.6 million revenue — will realize the mass sale of millions of shares.

But even just the suggestion appears to have spooked investors.

“In this offering it says the Trump trust could sell shares — it doesn’t necessarily mean that they will,” Morningstar analyst Seth Goldstein told ABC News. “It signals to the market that they could.”

“This leaves it up in the air if and when a share sale will happen,” he added.

In short, instead of building a viable business that generates meaningful revenue to reflect its valuation, TMTG still feels more like an enrichment scheme for Trump and his closest associates.

“Trump Media has been pretty unsuccessful at creating an operating business model, but they have been quite successful at selling their stock,” University of Florida finance professor Jay Ritter told ABC News.

    Debunking Myth #8: “Corporate tax cuts create jobs” BUNK! Robert Reich    


    Debunking Myth #8: “Corporate tax cuts create jobs” BUNK! Robert Reich      
Friends, I’m tired of hearing Republicans claim that we should reduce taxes on corporations because corporate tax cuts create jobs. It’s untrue. Also untrue are the repeated Republican assertions that tax increases on corporations, and regulations requiring corporations to better protect the health and safety of their consumers and workers and the environment, are “job killers.” Here’s the truth: Most American jobs are created by poor, working, and middle-class people whose increased spending on goods and services causes businesses to create more jobs. If most Americans don’t have enough purchasing power to buy the stuff businesses produce, businesses will lay workers off. If    Forwarded this email? Subscribe here for more Debunking Myth #8: “Corporate tax cuts create jobs” BUNK! Robert Reich Jul 19           READ IN APP     (Please click on the above and see our video.)   Friends,   I’m tired of hearing Republicans claim that we should reduce taxes on corporations because corporate tax cuts create jobs. It’s untrue.   Also untrue are the repeated Republican assertions that tax increases on corporations, and regulations requiring corporations to better protect the health and safety of their consumers and workers and the environment, are “job killers.”   Here’s the truth: Most American jobs are created by poor, working, and middle-class people whose increased spending on goods and services causes businesses to create more jobs.   If most Americans don’t have enough purchasing power to buy the stuff businesses produce, businesses will lay workers off. If they have more purchasing power, businesses will add jobs.   In 1914, Ford boosted its workers’ wages. As a result, Ford employees — and the employees of other big firms who felt they had no choice but to raise their wages to compete in the job market with Ford — could afford to buy Model T Fords, enlarging the demand for Model T’s, thus creating more jobs at Ford (and at every other automaker).   The Great Crash of 1929 ushered in the Great Depression of the 1930s because people didn’t have enough money to buy the goods and services the economy could produce. Which caused a vicious cycle of fewer jobs and even less money in the pockets of average people.   The cycle ended only when the government stepped in through vast public spending on World War II.   So when you hear that corporations need tax cuts in order to create more jobs, or that tax increases on corporations or regulations on corporations are job killers, know that this is baloney.   The best way to create more jobs is to put more money into the pockets of more workers.   Which is why we need a higher minimum wage, an expanded Earned Income Tax Credit, and stronger unions that can bargain for higher wages. All these will increase demand for the goods and services businesses produce, thereby creating more jobs.   Remember, it’s working people who create jobs when they have enough money in their pockets to buy.they have more purchasing power, businesses will add jobs. In 1914, Ford boosted its workers’ wages. As a result, Ford employees — and the employees of other big firms who felt they had no choice but to raise their wages to compete in the job market with Ford — could afford to buy Model T Fords, enlarging the demand for Model T’s, thus creating more jobs at Ford (and at every other automaker). The Great Crash of 1929 ushered in the Great Depression of the 1930s because people didn’t have enough money to buy the goods and services the economy could produce. Which caused a vicious cycle of fewer jobs and even less money in the pockets of average people. The cycle ended only when the government stepped in through vast public spending on World War II. So when you hear that corporations need tax cuts in order to create more jobs, or that tax increases on corporations or regulations on corporations are job killers, know that this is baloney.  The best way to create more jobs is to put more money into the pockets of more workers. Which is why we need a higher minimum wage, an expanded Earned Income Tax Credit, and stronger unions that can bargain for higher wages. All these will increase demand for the goods and services businesses produce, thereby creating more jobs. Remember, it’s working people who create jobs when they have enough money in their pockets to buy.