Are Republicans Forgetting What Trump Taught Them About Social Security and Medicare?
Former president and 2024 presidential candidate Donald Trump released a video on January 20 with a message to his fellow Republicans: “Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security to help pay for Joe Biden’s reckless spending spree.”
Trump issued his counsel after Kevin McCarthy struck a deal with conservative holdouts to win the House speaker’s gavel. One of McCarthy’s many concessions to his conference’s most conservative members was a handshake agreement to produce a budget that balances in 10 years, though how exactly to achieve that goal was not settled. Asked on Fox News if military spending—which was just increased in the bipartisan $1.7 trillion “omnibus” bill—should be part of any budget-cutting plan, Representative Michael Waltz, a Florida Republican, said, “I’m all for a balanced budget. We’ve got to get spending under control, but we are not going to do it on the backs of our troops and our military … If we really want to talk about the debt and spending, it’s the entitlements program that’s 70 percent of our entire budget.”
That’s a little overstated; 63 percent of the federal budget is in “mandatory” programs, also known as entitlements, which have spending levels set by formulas in the law, not annual spending bills. And the programs most commonly referred to as entitlements—Social Security and Medicare—respectively compose 21 and 13 percent of the federal budget.
Waltz is a member of the Republican Study Committee, a sizable conservative faction of the House Republican Conference. (The RSC’s posted list of members from the previous House totals 158, nearly three-quarters of the conference.) His comments align with the RSC’s proposed fiscal year 2023 budget, which includes several policies designed to cut retirement benefits as well as move towards privatization: increasing the retirement age, “slowing the rate of growth” of Social Security benefits (in effect, a benefit cut) for future retirees with relatively “higher levels of average earnings,” steeper Medicare premiums for “higher-income beneficiaries,” allowing employers and employees to divert payroll taxes from the Social Security trust fund into “private retirement options,” and increased competition between traditional Medicare and privately administered Medicare Advantage plans.
For these policies to retain such support among House conservatives suggests that Republicans have failed to absorb Donald Trump’s one good political lesson: Don’t mess with Social Security and Medicare.
During the two previous decades, Republicans wasted significant political capital on entitlement reform. George W. Bush’s disastrous second term began with the cocksure and miscalculated conclusion that he had earned a mandate to partially privatize Social Security. But his plan was met with horrible polls and unified opposition from Democrats, who had the numbers in the Senate to filibuster. Representative Paul Ryan, ranking member of the House Budget Committee at the beginning of Barack Obama’s presidency, picked up the privatization mantle, targeting both Social Security and Medicare in his “Roadmap for America’s Future” policy paper. Becoming the GOP’s leading policy architect propelled him to run for Vice President in 2012.
Four months after the defeat of the Mitt Romney-Paul Ryan ticket, Trump dropped some wisdom on a rattled crowd at the 2013 Conservative Political Action Conference (CPAC):
As Republicans, if you think you’re going to change very substantially—for the worse—Medicare, Medicaid, and Social Security, in any substantial way, and at the same time you think you’re going to win elections, it just really is not going to happen … because polls have come out—even the Tea Party, which I love so dearly—78 percent of the people said, Leave my Medicare, my Medicaid, my Social Security alone. That’s the Tea Party.
In early 2015, shortly before his presidential campaign launch, Trump explicitly separated himself from Ryan. As reported by CNN, Trump said, “Paul wants to knock out Social Security, knock it down, way down … you’re going to lose the election if you do that.” And in his 2015 Trump Tower address declaring his presidential candidacy, he made sure to emphasize he would not cut Social Security or Medicare.
Trump understood that the conservative backlash to the Obama presidency was not fueled by hyper-libertarians clinging to Ayn Rand novels but by older voters fearful of culturally progressive change yet still reliant on the pillars of the New Deal and the Great Society.
However, after becoming president, Trump wobbled. In January 2020, Trump said on CNBC that he would “take a look” at entitlements in a second term, prompting chatter that he was backing off of his past position, though he took to Twitter to argue otherwise. After the pandemic hit, in the heat of the 2020 presidential campaign, Trump deferred payroll tax collection, then pledged to eliminate it in a second term. Since payroll taxes finance Social Security and Medicare’s hospital insurance trust fund, his position gave his opponent, Joe Biden, an opening to run ads charging Trump with putting Social Security on a path to bankruptcy by 2023. Biden echoed the charge in the second presidential debate. (FactCheck.org scolded the campaign ads for saying Trump “planned cuts” to Social Security when he was insisting, however fantastically, he would replace payroll tax revenue with general fund revenue.)
As Trump muddied his position on entitlements, other Republicans, led by the Republican Study Committee, rekindled interest in benefit cuts and privatization, despite its limited appeal. When the group released its fiscal year 2022 budget, early in the Biden presidency, conservative Washington Post columnist Henry Olsen, a senior fellow at the Ethics and Public Policy Center, wrote:
The RSC budget is an intellectually coherent vision for a smaller, limited federal government. But that vision no longer unites today’s GOP coalition, as the January EPPC-YouGov poll I drafted plainly shows. Sixty-three percent of Trump voters, for example, want to keep Social Security benefits the same for future retirees as they are for current recipients, even if payroll taxes must increase.
Yet in the 2022 midterm election, when Republicans—such as Senate candidates Blake Masters in Arizona and Don Bolduc in New Hampshire—expressed interest in privatizing Social Security, they were pounded in Democratic ads, contributing to their defeats. And some elected Republicans can’t let go of their dreams to privatize Social Security and Medicare.
Of course, just because a faction of a party embraces a position doesn’t mean that position is a fundamental tenet of the entire party. One hundred and twenty-three House Democrats in the previous Congress sponsored legislation for a single-payer health care system. Still, that position was rejected by Biden, and the bill was bottled up by then-Speaker Nancy Pelosi.
A commanding speaker can contain ideologically aggressive House members. McCarthy, however, started his tenure by ceding power. He secured the post by accepting a rules change allowing any one House member to call a vote on whether to fire the speaker. If that happened, McCarthy could lose his post with five Republican defections. Whether or not McCarthy will center entitlement reform in upcoming budget negotiations depends on whether his conference’s most conservative members pressure him to do so.
Democrats may not mind if Republicans ignore Trump’s rare nugget of political wisdom. Another rout in the court of public opinion could weaken Republican leverage, smoothing the path to a favorable budget deal and an averted debt limit crisis.
However, at some point, Democrats and Republicans will have to come together to address looming shortfalls in the Social Security and Medicare hospital insurance trust funds. The most recent Social Security and Medicare Boards of Trustees report estimates that the Social Security fund will deplete in 10 years and the Medicare fund in three years. These estimates are revised yearly, but the Trustees’ projections have been reasonably consistent for the last decade. In the event of trust fund depletion, payroll tax revenue will keep coming in, and the two trust funds would then be able to cover, respectively, 76 and 91 percent of scheduled benefits.
The eventual solution need not punish future retirees or undermine the fundamental structure of these programs. Solvency can be achieved by taking in more revenue from the wealthy. Senators Bernie Sanders and Elizabeth Warren have a bill that extends Social Security’s solvency by 75 years while increasing monthly benefits by $200 by subjecting income above $250,000 to the payroll tax and levying Social Security taxes on investment and business income for high earners.
Representative John Larson, the Connecticut Democrat who had chaired the Social Security subcommittee of the House Ways and Means Committee, released a bill in 2019 that achieved solvency while funding a two-percent benefit increase. Larson would raise new revenue by applying the payroll tax to income above $400,000 and gradually increasing the payroll tax rate. The centrist deficit hawks at the Committee for a Responsible Federal Budget (CRFB) praised Larson’s 2019 bill as fiscally sound but criticized his 2021 version for dropping the tax rate hike while adding more benefits and failing to significantly extend solvency.
Passing these progressive approaches to Social Security reform is not simple. By law, Social Security cannot be addressed in the filibuster-proof budget reconciliation process. Therefore—barring a vast partisan wave in a future election—bipartisanship will be necessary. And just as Democrats are never going to support significant Social Security cuts, Republicans are never going to support major Social Security tax increases. “I don’t think we’re going to get to Social Security solvency [without] both a revenue and a benefit component,” Marc Goldwein of CRFB told me in an interview.
Goldwein argues that finding common ground on shoring up the Medicare hospital insurance trust fund, which is closer to insolvency than the Social Security trust fund, will be easier. “If you look across the Obama and Trump budgets,” said Goldwein, “you see huge amounts of commonality” on cost-saving healthcare proposals, such as reduced payments to post-acute care providers and promotion of generic pharmaceuticals. (Any future bipartisan efforts on Medicare would likely have to overcome fierce pushback from the affected health industry interests.)
This year is probably not the year we will see any bipartisan cooperation on Social Security and Medicare. Republicans may need to settle their internal divisions and set aside ideological pipe dreams before Social Security and Medicare can be addressed in a calm, non-ideological fashion. Waltz, the Republican who had publicly urged considering entitlement cuts, seemed to suggest in his Fox News interview that not every House Republican was with him. With a trace of passive-aggressive frustration, he said of entitlement reform, “I look forward to hearing that from those folks who are pushing towards a balanced budget.”
Democrats should exploit disunity in the Republican conference to strengthen their bargaining position, avoid a debt limit crisis this year, drive a stake through the RSC position on entitlements, and prevent a trust fund crisis in the years to come.
Many Democrats observe that Republicans only seem to care about balancing the budget when a Democrat occupies the White House. The implication is that Republicans are being political, not principled. That’s certainly true in some cases. But we should remember that the fractious Republican Party is not of one singular mind. A faction of Republicans may believe what they say about cutting entitlements and are blinding themselves to political realities. If they can’t remember what Trump taught them, Democrats may need to administer a fresh lesson.
The post Are Republicans Forgetting What Trump Taught Them About Social Security and Medicare? appeared first on Washington Monthly.