It was one of the most startling moments of President Biden’s State of the Union address: Heckled by Republicans for accusing them of trying to cut Social Security and Medicare, the president stopped to register the reaction.

“As we all apparently agree: Social Security and Medicare is off the books now, right?” Biden said.

Republicans in the Capitol applauded in response.

“We’ve got unanimity!” the president added, in apparent surprise.

The ad-libbed exchange on Tuesday night encapsulated a newfound reality in Washington: The leadership of both parties have become unwilling to discuss potential changes to Social Security and Medicare – even as time dwindles before they reach financial insolvency and benefit reductions for tens of millions of American seniors will automatically go into effect. What used to be a routine point of at least nominal agreement on “hard choices” about the budget is, for now at least, off-limits as Washington grapples with GOP demands to cut federal spending in exchange for raising the nation’s debt limit.

Biden has repeatedly slammed congressional Republicans for advancing plans that would cut both programs, and with the debt ceiling debate underway, the White House plans to step up those attacks this week. The president is set to travel to Florida on Friday to criticize a proposal from Sen. Rick Scott, R-Fla., that would sunset all federal programs within five years.

The breakdown of even potential negotiations on the programs — a dramatic turnabout from just a decade ago during the Obama administration — reflects both the rise of the left in the Democratic Party and the influence of former president Donald Trump on the right, which has curtailed the power of centrist lawmakers who in the past sought significant cuts to entitlement spending. And since the last time Washington contemplated the long-term viability of both programs a dozen years ago, the large generation of baby boomers — which has a relatively high voter participation rate — has started to age into eligibility for them.

Both Biden and House Speaker Kevin McCarthy, R-Calif., have been adamant that changes to the old-age programs are off-limits in any agreement to raise the debt ceiling. While many Republican lawmakers believe the programs must be cut, GOP officials are reluctant – and also unable – to do so without Democratic support, which leaves the voices calling for reductions increasingly ostracized within their own ranks and has party leaders quick to distance themselves from unpopular proposals. Most of the few Democratic senators who once backed such measures, meanwhile, have largely been voted out of office or retired.

A White House spokesman this week condemned a proposal from Sens. Joe Manchin III, D-W.Va., and Mitt Romney, R-Utah, for a commission to issue recommendations on Medicare and Social Security as representing a “death panel” for the programs, effectively quashing the idea, always popular in Washington, of kicking the whole subject to a group of experts to ponder.

And yet the shelving of these discussions raises questions about what, exactly, will be done about the programs. Polling suggests most Americans believe seniors should be entitled to their full benefits without cuts. But Medicare’s trust fund is projected to be exhausted by 2028, at which point the federal government probably would delay or reduce reimbursements to doctors and hospitals under the federal insurance program relied on by more than 60 million people. Unless Congress acts, Social Security benefits for a similar number will also be cut by 20 percent starting in 2035, according to the latest federal report on the matter. Even as these dates grow nearer, lawmakers have become much less willing to discuss potential solutions.

During his speech on Tuesday night, Biden promised his forthcoming budget would outline his proposal to keep Medicare solvent for the next two decades – almost certainly through tax hikes with no chance of passing the GOP-controlled House.

“For better or for worse, there’s been a sea change among members when it comes to dealing with Social Security and Medicare. There was a time when both sides appeared to be interested in trying to address it, but that was then, and this was now,” said Jim Manley, who served as a top aide for then-Senate Majority Leader Harry M. Reid, D-Nev., during negotiations over entitlements under the Obama administration. “But where does that leave us?”

The outright rejection of revisions puts Social Security and Medicare on a trajectory that now looks almost certain to culminate in unprecedented high-wire congressional brinkmanship over benefits for the country’s elderly population.

Without intervention from policymakers, funding for Medicare Part A – which covers seniors’ hospital care, nursing facilities, surgery, home health care and other services – will be depleted sometime in 2028, only five years from now, according to the latest report by the trustees who track the program. That date could be even sooner, if there is an unexpected increase in medical demand or prices. By 2028, Medicare funding will only pay roughly 90 percent of its expenses, leading to as much as a 10 percent cut to providers that will “jeopardize access to care,” according to the Committee for a Responsible Federal Budget, which pushes for lowering the deficit.

Similarly, Social Security is only projected to collect revenue amounting to roughly four-fifths of its annual expenses by 2034, with the aging of the baby boomers into retirement pushing up the program’s costs. Failure to address the issue will lead to an even more dramatic immediate 20 percent cut for all seniors receiving a Social Security check, which will reduce the benefit for a traditional retiring couple by between $12,000 and $17,000, the Committee for a Responsible Federal Budget said. That would occur just as today’s 55-year-olds reach retirement age.

Social Security and Medicare are both primarily funded by payroll taxes, which are collected from a levy on both employees and employers. The government is projected to spend a combined $2.3 trillion on Social Security and Medicare in 2023, according to the nonpartisan Congressional Budget Office. That’s roughly 40 percent of the entire federal budget.

“Like it or not, we are on a crash course toward insolvency,” said Donald Schneider, who served as a top aide to House Republicans on the Ways and Means Committee and is now deputy head of U.S. policy at Piper Sandler, an investment bank. “For both parties to collectively put their heads in the sand – or to take entitlements off the table for political expediency, and to not even discuss them – is dangerous.”

But Washington policymakers have for the last two decades found little political upside in trying to craft responses to the well-known funding gaps facing the programs. President George W. Bush faced fierce criticisms over his plan to privatize parts of Social Security – a proposal that was ultimately scuttled even before it came up for a vote. During a debt ceiling standoff in 2011, the Obama administration considered agreeing to slow the growth in Social Security benefits, and Democrats entertained raising the retirement age as part of a broader fiscal package with Republicans. Even though the measures were floated to appeal to Republicans, the National Republican Campaign Committee accused Obama of a “shocking attack on seniors.” Talk of a compromise on the programs evaporated in favor of caps on less politically sensitive federal programs, such as federal agency funding.

“Both Obama and Bush were serious, and made serious attempts,” said Doug Holtz-Eakin, a former economic adviser to Bush and Sen. John McCain, R-Ariz. “That appetite has completely disappeared in the past decade.”

Rep. Tom Cole of Oklahoma, a top GOP member of the committee that sets federal spending levels, recalled another bipartisan effort roughly 40 years ago to spare Social Security from insolvency, changes that lifted the retirement age and raised new revenue that Biden himself supported. For its two key architects – House Speaker Tip O’Neill, D-Mass., and President Ronald Reagan – the deal was “good politics,” said Cole, who noted that if lawmakers “work together to save [entitlements], then you can run on that.”

Democratic lawmakers say that both Social Security and Medicare can be addressed without any cuts to the program – an approach expected to be codified in Biden’s upcoming budget, which is set to be released next month. Some liberal lawmakers have pushed for a one-line change to federal law that would require general funds from the Treasury Department to be used to pay off the shortfalls in the programs and make beneficiaries whole. Some liberal advocates, meanwhile, have pointed out that tax hikes would take care of the funding shortfall. One proposal to lift the current cap on earnings subject to Social Security payroll taxes, endorsed by Sen. Bernie Sanders, I-Vt., and others in the Democratic caucus, would extend funding for the program for decades. That cap is now about $160,000.

“I don’t know if there’s really much of anyone who wants these cuts now outside the very narrow budget-focused types,” said Tyson Brody, a Democratic operative who worked on both the Hillary Clinton and Sanders presidential campaigns. “It’s really been a victory for common sense.”

Conservative policymakers are equally adamant that changes can be made to the programs without hurting vulnerable or low-income Americans. Avik Roy, who served as a health care adviser for Romney, said the federal government could recoup hundreds of billions of dollars by cutting off Medicare eligibility to rich Americans. For instance, Rep. Bruce Westerman, R-Ark., and Sen. Mike Braun, R-Ind., have introduced legislation that would limit Medicare benefits for those with more than $10 million in lifetime earnings. Another obvious option would be to try to rein in the rate of increase for spending on hospitals through the program.

“There’s an opportunity for constructive dialogue if both parties want to have it,” Roy said. “There’s lots of ways to cut Medicare spending in a way that still enables the program to support health care for middle- and low-income people.”

In the meantime, however, these and even more modest ideas are not likely to be seriously discussed. Republicans have characterized Biden’s Inflation Reduction Act, enacted last year, as an attack on Medicare because it lowers federal spending on prescription drugs, although the measure also makes the drugs cheaper for seniors. Democrats slammed the Trump administration for including in its budget cuts to provider fees. Neither was likely to amount to any material changes for beneficiaries.

 

The Washington Post’s Tony Romm contributed to this report.

Copy the Story Link

Comments are not available on this story.

« Previous

Former Twitter executives deny pressure to block Hunter Biden laptop story

Next »

Maine officials believed relief checks were tax exempt – but never asked the IRS