When it comes to the nation’s long-term spending on social programs like Medicare, Medicaid and Social Security, Republican leaders are selling the people of the United States either a terrible lie, or a terrible truth.
They promise to cut the programs, in their proposed budgets and tax-cut legislation, but they seem to do so knowing the cuts cannot be enacted. Yet the finances of our big social programs are increasingly challenged, and something really does need to change. And the danger is that when the money runs short enough, the only option other than benefit cuts will be huge tax increases that would face tremendous opposition. At that point, the benefit cuts the GOP keeps promising in its draconian budgets that seem so unlikely now could come to fruition.
Medicare is scheduled to run out of money in 2026. Social Security is set to run out in 2034. That means the programs would only be able to pay a percentage of promised benefits at those points — 77 percent for Social Security and 91 percent for Medicare. And those percentages would keep decreasing, as the ratio of healthy, young workers to retirees decreases. In 1950, there were 16 workers contributing to Social Security for every person getting benefits. By 2013, there were only 2.8 people paying in for every beneficiary. By 2040, according to federal projections, the ratio will be 2:1.
In June, House Speaker Paul Ryan once again introduced a deficit-reduction plan that would force Congress to cut Medicare spending by more than $500 billion over the next decade, and Medicaid spending by $1.5 trillion. Even Social Security gets slashed by $4 billion. And that’s just the beginning. There’s also at least $302 billion in “discretionary” spending cuts over the next decade, which would mean slashing food stamps and the Supplemental Security Income program that provides for blind and disabled citizens, as well as impoverished children.
This is just a proposal. But it’s significant. It was via such a plan, passed into law, that Congressional Republicans created the space for their tax plan.
Last year, to pass President Donald Trump’s massive tax cut, Congress had to approve a spending plan promising $1.5 trillion in spending cuts over 10 years. That’s how the “money” was found to offset the tax cut.
So there is law in place that calls for $472 billion in cuts from Medicare and $1 trillion slashed from Medicaid over a decade. There is a general consensus that those cuts are a fantasy, just like Ryan’s annual budget plan. Cutting Medicare would be immediate political suicide. Cutting Medicaid, which mostly goes to care for children and senior citizens in nursing homes, wouldn’t be much better in terms of popularity.
And Trump has little appetite for such cuts. He beat out 16 establishment GOP candidates for the party’s presidential nomination by being savvy enough to realize people were sick of having their benefits assailed by wealthy politicians in the employ of wealthier political contributors.
But Trump will not be in office when these programs run out of money. Economists, almost without exception, agree the tax cuts won’t spur an economic boom to produce the increased tax revenues Trump and the GOP claim will materialize. And Republicans want to stem the flow of even legal immigrants, a group whose youth and high birthrates can bring the ratios of workers to retirees back into sustainable balance, a main key to funding these programs going forward.
Implementing the GOP cuts would be devastating. But passing them and not implementing them is critically dangerous, too, because it’s a charade that keeps us from finding real solutions.
Social Security can be funded with a small increase to the payroll tax cap, an eventual, moderate increase in retirement age, and perhaps a surcharge on very high earners. Medicare funding is harder to fix, but it can be done. The nation needs to stop paying for expensive procedures that provide almost no benefit, and the health care industry has to be forced to compete on the costs of drugs and procedures and deliver services more efficiently and effectively.
And none of that will happen while the focus in Washington is on passing huge spending cuts. Ryan will leave the House next year, leaving the problems he’s pretended to address monumentally worse than when he arrived. These budget plans, whether they turn out to be imaginary or devastating, are doing nothing to solve one of our nation’s most pressing challenges. And those challenges, manageable if we address them now, will be all but impossible to conquer if we wait.