The Medicare and Social Security trustees’ reports illustrate the same thing they do every year: These programs are not financially sustainable and will require reforms if they are to continue to exist.

The insolvency date for Medicare was extended to 2036, rather than 2031 from last year’s report, leading some to conclude that the program has fundamentally improved. This conclusion is wrongheaded for two reasons.

First, the insolvency date is only for Part A of Medicare, the hospital-insurance trust fund. The bulk of Medicare spending increases in the foreseeable future are in Part B, outpatient physician services. The fact that the slower-growing portion of Medicare will nonetheless be insolvent by 2036 should still be alarming.

Second, Medicare is the second-fastest-growing category of federal expenditures, behind only interest on the debt. And rising Medicare costs mean more borrowing and therefore more interest on the debt. Medicare will continue to crowd out other categories of federal spending. It is already larger than national-security spending. And we can’t grow our way out of the problem, as this would lead to even higher levels of spending.

Social Security’s insolvency date is the same as in last year’s report, 2033. Current law would require a 21 percent benefits cut in 2033 if nothing changes between now and then. The likelier outcome, which the Congressional Budget Office assumes would happen, is that Congress would borrow more to keep benefits funded.

That might sound like an okay outcome, except that the borrowing from Medicare and everything else will still be ongoing, and upward pressure on interest rates will continue to increase. How long will investors continue to lend trillions of dollars to the Treasury, largely to fund entitlement programs, on favorable terms?

The insolvency dates aren’t as important as the borrowing these programs already require. As Brian Riedl wrote for us last year, the trust funds “contain no economic assets and therefore save current taxpayers no money.” They matter for the administration of the programs, not to taxpayers who ultimately pay the costs.

The going assumption in Washington during the 2010s — that interest rates would stay low in the long run — seems unlikely to be accurate. The rate on a ten-year Treasury bond has more than doubled since the beginning of 2022 and currently sits at around 4.5 percent. Borrowing now is the same as taxing later, when bondholders will need to be repaid with real money.

If you don’t like inflation now, you’ll really hate it when the government has to print money to pay bondholders. Not only will it cause prices to rise, it will push interest rates higher, as bondholders demand greater returns if they are to continue to lend to the Treasury.

Politicians have a built-in warning mechanism for this looming crisis every single year when the trustees’ reports are released. They can pretend they don’t notice or celebrate a later insolvency date, but they can’t change the math unless they reform the programs.