If you follow political debates long enough, arguments you never thought you’d hear can become key elements of both parties’ political platforms. That’s certainly the case with some Republicans and their up-to-date “never touch Social Security and Medicare” stance.
Over the weekend, newly elected GOP Sen. J.D. Vance of Ohio tweeted that former President Donald Trump was 100% right to demand that “Republicans under no circumstances vote to cut a penny from Medicare or Social Security.” Vance’s tweet was published in the context of the debt ceiling fight, but Trump has long maintained that position.
Now, to be fair, the Republican Party’s well-intentioned involvement in the overall debt ceiling dispute is confined by the miniature time Congress has to raise the cap, all but precluding credible reforms to Medicare and Social Security. Reforming these two programs will take a long time and require action from both sides. However, this reality is no reason to argue that the benefits of the programs should never be compromised.
I can’t wait to hear the great plan that the Republican “don’t touch Social Security and Medicare” club has to address the $116 trillion over 30-year shortfall – or 6% of US GDP – facing both programs. Lack of action by Congress means no money to cover all benefits. This means huge cuts that will hurt low-income seniors who really depend on the programs.
Of course, if Vance and friends insist on not touching benefits, they could address Social Security and Medicare shortfalls with massive tax increases. Only in the case of Social Security, when the trust fund runs out, they will have to agree to an immediate payroll tax escalate from 12.4% to 15.64%, or almost 25%. Add to that the tax escalate necessary for Medicare, and then repeat this exercise for years to make up the entire shortfall.
It’s not like we didn’t warn politicians that trouble was coming. Back in 2000, around the time I started working on fiscal issues, experts were already warning that the Social Security trust fund would run out of assets by 2037, resulting in painful benefit cuts. The situation has now deteriorated further, with the trust fund now on track to run out in 2035, with no real hope of solving the problem.
In other words, these problems shouldn’t surprise anyone. When Social Security started, life expectancy was lower. In 1950, there were over 16 employees per beneficiary. The ratio is currently below three workers per retiree, and by 2035 it will be just 2.3 workers per retiree. Add to that decades of politicians buying votes by expanding benefits beyond incoming payroll taxes, and you have a real fiscal crisis on your hands.
That’s why it’s so disturbing that so many in the Republican Party are abandoning the education of a public that has been brainwashed for years with misleading phrases like: “You’ve earned Social Security benefits, so you’re entitled to the benefits now promised” or “There’s an account with your name and surname.” Such disinformation makes a stern discussion about reform very arduous.
There is no doubt that retirees deserve fair treatment, but the facts are that the Supreme Court ruled in 1960 that workers have no legally binding right to Social Security benefits and if Congress cuts benefits even by, say, 50% so he can do it – regardless of how much someone has paid into the program. This will not happen, but the ruling is still valid. It is also fiction to claim that all the promised benefits were earned by employees – this was not the case. This is in part because current retirees pay taxes on current employees, not from funds saved from payroll taxes paid by retirees during their employment.
It’s magical thinking to say that touching Social Security and Medicare is not a good idea. What’s even weirder is that many of these same Republicans want to spare these two programs while cutting Medicaid to pieces. Medicaid also needs to be reformed, but at least this program serves destitute people. In contrast, seniors currently receiving Social Security and Medicare are overrepresented in the top income quintile, while younger Americans are overrepresented in the bottom quintile. So these guys want to cut destitute people’s Medicaid benefits while subsidizing relatively wealthy boomers with taxes collected from relatively destitute youth. Yes.
The GOP’s transformation into the party of large and fiscally reckless government continues 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. To learn more about Veronique de Rugy and read articles by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.twórcy.com.
