Social Security, Medicare clash comes down to what constitutes a ‘cut’

The coming battles over the nation’s safety-net programs are beginning with an early clash over a thorny question of semantics: What constitutes a cut?

In the eyes of many Democrats, any change to Medicare, Medicaid or Social Security that erodes benefits provided under current law would be considered a cut — and therefore stands as a nonstarter with liberals as Congress seeks ways to rein in deficit spending. 

Across the aisle, Republicans have long promoted a series of safety-net changes — including proposals to hike eligibility ages, reduce benefits for wealthier seniors and tweaked cost-of-living adjustments to produce long-term government savings — which they see as necessary “reforms” in the effort to shore up entitlement finances for the sake of future generations.

The feuding portrayals — cuts versus reforms — are already playing a pivotal role in the political messaging war that will accompany Capitol Hill’s looming budget battles, as Republicans seek to slash federal spending and Congress scrambles to prevent a government default over the summer and a shutdown later in the year. 

GOP leaders are vowing that Medicare and Social Security are off the table in the fight over raising the debt ceiling, which is expected to culminate over the summer. But with Medicare projected to experience funding shortfalls in 2028, and Social Security to follow in 2032, Republicans are already sounding alarms for Congress to take action sooner than later. 

“At some point in the future this country's going to have to talk about those things,” said Rep. Buddy Carter (R-Ga.). “I don't know when that point will be, but certainly what Republicans want to do — and this is extremely important — we want to secure and stabilize and save these programs. That's what we are proposing." 

Democrats say they aren’t buying those assurances given longstanding GOP efforts to alter the nation’s safety-net framework — which more recently have included former President George W. Bush’s push to privatize Social Security and ex-Speaker Paul Ryan’s (Wis.) plans to voucherize Medicare and slash Medicaid funding.

“The American people realize that if it walks and quacks, it’s a duck. And this is about cuts,” said Rep. Raúl Grijalva (D-Ariz.), former head of the Progressive Caucus. “We have to keep repeating that and making sure that they don’t get away with couching it, or hiding it under the question of ‘reform.’ It’s not reform; they’re major, major cuts.”

Emblematic of the broader debate is the partisan disagreement over proposals to hike the eligibility age for Social Security. That idea has been long endorsed by House GOP leaders, and a proposal to increase the retirement age to 70 was most recently included in the 2023 budget blueprint championed by the Republican Study Committee (RSC), which is composed of roughly three-quarters of the GOP conference.

Supporters of the proposal say it’s a reasonable change that merely reflects increases in life expectancy, much as Congress moved to hike the Social Security age from 65 to 67 decades ago. 

“I don’t count that as a cut, myself,” said Rep. Don Bacon (R-Neb.). “We’re trying to save it. It’s going to go insolvent … so we need to have a plan to fix it.” 

Democrats have a decidedly different view. And Rep. Jan Schakowsky (D-Ill.) cited the RSC blueprint directly, characterizing that plan as “a cut in Social Security” — not a reform.  

“If the Republicans want to raise the age, they're absolutely stealing from the pockets of people who paid every month, or every two weeks, or whatever, for their Social Security,” she said. 

Rep. John Larson (D-Conn.), who is among the loudest defenders of Social Security in Congress, delivered a similar message, arguing that just because Americans are living longer is hardly a justification for restricting access to benefits.

“Let me ask the simple question: If you're living longer, are you going to need to be living on less [money]?” he asked. 

Larson acknowledged that wealthier retirees are in a position to handle a cut to their Social Security check. “But for the bulk of Americans, they cannot,” he said. 

Another proposal for reducing Social Security spending over the longer term would link future cost-of-living increases to the so-called chained consumer-price-index (CPI), which would reduce benefits over time. Former President Obama had proposed that change a decade ago in an effort to bring Republicans behind a broader deficit-reduction package. Instead, he succeeded only in infuriating liberals in his own party, who are now steeling themselves for similar proposals from the GOP. 

“They're going to redefine cuts — from chained CPI, to the age thresholds and other things,” said Rep. Jared Huffman (D-Calif.). “I'm sure that we'll see some Rick Scott-like Social Security attacks before this is over."

A similar partisan clash is taking place in the debate over Medicaid, the low-income healthcare program funded jointly by states and the federal government. 

Historically, the cost burden has been split evenly between Washington and the states, but under ObamaCare, Medicaid was expanded to cover a much broader population, including more low-income adults, while the federal government committed to picking up a large bulk of the new tab. 

This year, with Republicans in charge of the House, key lawmakers are eyeing changes that could include a scaling back of the coverage expansion; efforts to bring the federal-state funding ratio closer to parity; and the installation of new work requirements for able-bodied adults. 

“Medicaid is a very important safety net, and we need to protect that safety net. But a lot of Republicans believe that more flexibility within Medicaid would lead to opportunities for better outcomes at a lower cost,” said Rep. Cathy McMorris Rodgers (R-Wash.), chairwoman of the Energy and Commerce Committee, which has jurisdiction over Medicaid.

“[We’re] looking at work requirements, the able-bodied adults,” she added, “and also looking at … the cost-share by the federal government.”

Such proposals are already raising alarms among Democrats on the panel, who are vowing to fight them tooth and nail. 

“Of course they’re cuts,” said Rep. Frank Pallone Jr. (N.J.), senior Democrat on Energy and Commerce. “We’re going to resist them completely.”

The divisive debate highlights the difficulties facing lawmakers in both parties as they seek a bipartisan compromise that would fully fund the major safety-net programs ahead of their expected shortfalls. 

The programs are wildly popular across demographics, putting pressure on Republicans to agree to some form of tax hike to maintain core benefits. But they also face a financial squeeze with the retirement of the Baby Boomers and the rising cost of health care, challenging the Democrats’ resistance to certain benefit cuts, especially for younger, healthier and wealthier populations. 

The last time such an agreement was reached on Social Security was 1983, when two legendary senators — Bob Dole (R-Kansas) and Daniel Moynihan (D-N.Y.) — orchestrated a secret, 11th-hour deal in which Republicans reluctantly ceded tax hikes and Democrats grudgingly backed a gradual increase in the retirement age, which took effect just last year.

Rep. Michael Burgess (R-Texas), a senior member of both the Budget and Energy and Commerce committees, said the financial health of the entitlements will require Congress to follow a similar model. 

“There will be a lot of pushback,” Burgess said. ”But at the end of the day, we all know, particularly the programs that have the trust funds — Social Security and Medicare — when those trust funds are exhausted, there are some bad things that happen to beneficiaries.”