If you follow policy debates long enough, arguments you never thought you’d hear can become key components of the two parties’ platforms. That’s certainly the case when it comes to some Republicans and their new “Never touch Social Security and Medicare” position.
Over the weekend, newly elected Sen. J.D. Vance (R-Ohio) tweeted that ex-President Donald Trump was 100% correct to demand: “Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security.” Vance’s tweet was issued amid the debt-ceiling fight, but Trump has long held this position.
Now to be fair, the GOP’s well-intentioned engagement in the overall debt-ceiling dispute is limited by the short time Congress has to raise the limit, all but ruling out credible reforms of Medicare or Social Security. Reforming these two programs will take a considerable amount of time and requires bipartisan action. However, this reality is no reason to assert the programs’ benefits should never be touched.
I cannot wait to hear the grand plan that the “Don’t touch Social Security and Medicare” Republican caucus has to address the $116 trillion over 30 years shortfall — that’s 6% of the US gross domestic product — facing the two programs. No action from Congress means no money to pay for all the benefits. That means enormous cuts that will hurt the low-income seniors who truly depend on the programs.
Of course, if Vance and friends insist on not touching benefits, they could address the Social Security and Medicare shortfalls with enormous tax hikes. For Social Security alone, when the trust fund dries out, they will have to agree to immediately raise the payroll tax from 12.4% to 15.64% — or close to a 25% tax increase. Add to that the tax hike necessary for Medicare, and repeat the exercise over the years to fill the entire shortfall.
It’s not as if we haven’t been warning politicians these troubles were brewing. Back in 2000, roughly when I started working on fiscal issues, experts already warned the Social Security trust fund would run out of assets by 2037, triggering painful benefit cuts. The situation has deteriorated further, with the trust fund now on track to run dry in 2035, along with any practicable hope for fixing the problem.
In other words, these problems shouldn’t surprise anyone. When Social Security started, life expectancies were lower. In 1950, there were more than 16 workers for every beneficiary. That ratio is now below three workers per retiree and will be only 2.3 workers per retiree by 2035. Add to this trend decades of politicians buying votes by expanding benefits beyond incoming payroll taxes, and you have a true fiscal crisis on your hands.
That’s why it’s so alarming so many in the GOP are giving up on educating a public that’s been brainwashed for years with misleading sound bites like “You earned your Social Security benefits, so you are entitled to the benefits now promised” or “There’s an account with your name on it.” Such misinformation has made serious discussion of reform very difficult.
There’s no question retirees deserve fair treatment, but the fact is the Supreme Court ruled in 1960 that workers do not have a legally binding right to Social Security benefits, and if Congress cuts benefits even by, say, 50%, it can do so — no matter how much anyone has paid into the program. It won’t come to that, but the ruling still stands.
It’s also fiction that all the promised benefits were earned by workers — they weren’t. That’s in part because current retirees are paid with taxes from current workers, not from funds saved out of the payroll taxes retirees paid when they were in the workforce.
It’s magical thinking to say touching Social Security and Medicare is a non-starter. Even more strange, many of the same Republicans want to spare these two programs while putting Medicaid on the chopping block.
Medicaid should be reformed too, but at least that program serves poor people. By contrast, the seniors who receive Social Security and Medicare today are overrepresented in the top income quintile, while younger Americans are overrepresented in the bottom quintile.
So these guys want to cut benefits for poor people on Medicaid while subsidizing relatively wealthy boomers with taxes taken from relatively poor youngsters. Yikes.
The GOP’s transformation into the party of big and fiscally reckless government is proceeding apace.
Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.
