In one of his first steps after being elected Speaker of the House, Mike Johnson promised to form a bipartisan debt commission to address what he called “the greatest threat to our national security.”
This announcement sent shivers down the spines of Social Security and Medicare advocates.
That’s because when Johnson chaired the Republican Study Committee a few years ago, the conservative group called for a variety of changes to entitlement programs that it claimed would save them from bankruptcy. The Speaker now intends to address ballooning spending on Social Security and Medicare as part of the debt committee, according to a source familiar with his office.
However, supporters contend that the committee’s proposals are veiled attempts to cut benefits by raising the retirement age and making benefits less generous, among other changes.
Here’s what’s not up for debate: Social Security and Medicare are in financial trouble, and the nation’s debt is on an unsustainable path. But solving these financial problems will likely require such difficult decisions that lawmakers are loathe to deal with.
Social Security won’t be able to pay full benefits in 2034 if Congress doesn’t act, according to its trustees’ latest annual report. At that time, the fund reserves will be exhausted, and the program’s ongoing income will cover only 80% of the benefits due.
Medicare is in a more dire financial state. Its hospital insurance trust fund, known as Medicare Part A, will only be able to pay full scheduled benefits until 2031, according to its trustees’ annual report. At that time, Medicare will only be able to cover 89% of total scheduled benefits.
Meanwhile, the country’s debt is expected to grow by $22.1 trillion to $46.7 trillion by the end of fiscal year 2033, according to the Congressional Budget Office. The debt is expected to rise to a record level of 107% of GDP by fiscal year 2028 and reach 119% of GDP by the end of 2033. Spending on Social Security and Medicare is expected to rise as the country ages, forcing… More pressure on society. Congress to address programs.
The Republican Study Committee has long called for major changes to entitlement programs.
The fiscal year 2020 budget plan, released when Johnson took over the group, included a number of controversial proposals. He called for raising the full retirement age to 69 years instead of 67 years, and the early retirement age to 64 years instead of 62 years.
It would shift the inflation index used to determine the cost-of-living adjustment so that annual increases grow more slowly, and stop offering the adjustment to retirees whose annual income exceeds $85,000, or $170,000 per couple.
In addition, the committee will reform the benefit formula for new retirees to slow the growth rate for those with higher incomes, while expanding benefits for those with lower incomes.
As for Medicare, the group will raise the eligibility age to match Social Security’s full retirement age and then tie it to life expectancy. He would raise premiums and provide what he called “premium subsidies” — derided by critics as vouchers — to allow enrollees to buy private health insurance plans.
These changes would, among other things, reduce spending on Social Security by $756 billion over a decade and on health care by $1.9 trillion, according to the budget plan.
What is absent from the proposals is an increase in payroll taxes, a measure that calls for support. In fact, the committee claims that tax increases will not solve the financial problems facing Social Security.
Speaking at an American Enterprise Institute forum in 2018 when he was chairman-elect of the committee, Johnson said, “This can no longer be put off,” referring to the need for Congress to address entitlement programs, in addition to Medicaid and interest on the national debt.
Johnson now has the authority to get the House to take up these issues, although bipartisan solutions remain elusive.
“The bipartisan debt commission he plans to create will deal with a lot of these programs that are having funding problems,” a source familiar with the House Speaker’s office said. “We know that these programs are going out of business, so something needs to be done to get them back up and running again. That will certainly be a priority for the debt committee.”
However, proponents argue that lawmakers can hide behind the debt committee and avoid taking individual blame for approving interest cuts.
“The new speaker has made it clear that he is no friend of seniors, Social Security or Medicare,” said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. “His answer to the long-term solvency of Social Security is to cut benefits.”
President Joe Biden is also seeking to use the opportunity to tie Johnson to benefit cuts. A Biden campaign spokesman issued a statement after Johnson’s election saying the new speaker wants to “abolish Social Security and Medicare.”
However, doing nothing is not an option, said Charles Blahous, chief strategist at George Mason University’s Mercatus Center and former trustee general of Social Security and Medicare. But he doubts the debt commission will find bipartisan solutions.
Addressing Social Security’s huge fiscal issues will require implementing proposals similar to those put forward by the Republican Study Committee, as well as raising taxes and other measures, he said.
“The amount of savings you need to maintain solvency far exceeds anything in the RSC proposal,” Blahous said. “So, if you want to keep Social Security strong, you have to do all of these things and much more.”