The Social Security and Medicare 2007 Annual Report [summary] just came out. Highlights include:

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 16 percent in payroll tax revenues or an immediate reduction in benefits of 13 percent or some combination of the two.

The [Medicare] program could be brought into actuarial balance over the next 75 years by an immediate 122 percent increase in the payroll tax, or an immediate 51 percent reduction in program outlays or some combination of the two.

Every year we don't do something about this, the numbers just get worse, and larger looms the political battle between smaller benefits and higher taxes.