adminIn one of his first moves after being elected House speaker, Mike Johnson promised to form a bipartisan debt commission to tackle what he termed “the greatest threat to our national security.”
The announcement sent shivers down the spines of advocates for Social Security and Medicare.
That’s because when Johnson chaired the Republican Study Committee a few years ago, the conservative group called for a variety of changes to the entitlement programs that it argued would save them from insolvency. And the speaker now intends to address the ballooning spending on Social Security and Medicare as part of the debt commission, according to a source familiar with his office.
However, advocates contend the committee’s proposals are veiled attempts to cut benefits by raising the retirement age and making the 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 trajectory. But solving these fiscal woes would likely require such difficult decisions that lawmakers are loathe to deal with them.
Social Security will not be able to pay full benefits in 2034 if Congress doesn’t act, according to its most recent trustees’ annual report. At that time, the funds’ reserves will be depleted, and the program’s continuing income will cover only 80% of benefits owed.
Medicare is in a more critical financial condition. Its hospital insurance trust fund, known as Medicare Part A, will be able to pay scheduled benefits in full only until 2031, according to its trustees’ annual report. At that time, Medicare will be able to cover only 89% of total scheduled benefits.
Meanwhile, the nation’s debt is projected 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 projected to rise to a record 107% of gross domestic product by fiscal year 2028 and reach 119% of GDP by the end of 2033. Spending on Social Security and Medicare is projected to soar as the nation ages, putting more pressure on Congress to address the programs.
The Republican Study Committee has long advocated making major changes to the entitlement programs.
Its fiscal year 2020 budget plan, which was issued when Johnson helmed the group, included a number of controversial proposals. It called for raising the full retirement age to 69, up from 67, and the early retirement age to 64, up from 62.
It would shift the inflation index that’s used to determine the cost-of-living adjustment so that the annual increases would grow more slowly, and it would stop providing the adjustment to retirees whose annual incomes exceed $85,000, or $170,000 per couple.
Plus, the committee would overhaul the benefits formula for new retirees to slow the rate of growth for those who had higher earnings, while expanding benefits for those with lower earnings.
As for Medicare, the group would raise the eligibility age to match that of Social Security’s full retirement age and then index it to life expectancy. It would increase premiums and provide what it called “premium support” – which critics deride as vouchers – to allow enrollees to buy private health insurance plans.
These changes, among others, would cut spending on Social Security by $756 billion over a decade and on Medicare by $1.9 trillion, according to the budget plan.
Missing from the proposals are raising payroll taxes, a measure that advocates support. In fact, the committee argues that tax increases would not fix Social Security’s financial problems.
Speaking at an American Enterprise Institute forum in 2018 when he was the committee’s chair-elect, Johnson said, “This can no longer be kicked down the road,” referring to the need for Congress to address the entitlement programs, as well as Medicaid and interest on the national debt.
Johnson now has the power to have the House take up these issues, though finding bipartisan solutions remains a long shot.
“The bipartisan debt commission that he plans to establish will handle a lot of these programs that are in funding trouble,” said the source familiar with the speaker’s office. “We know that these programs are on the road to insolvency so something has to be done in order to get them back up and running again. That’ll definitely be a priority for the debt commission.”
Advocates, however, argue that lawmakers can hide behind the debt commission and avoid taking individual blame for agreeing to benefit cuts.
“The new speaker has made it clear he’s not a friend to seniors, Social Security or Medicare,” said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. “His answer to Social Security’s long-range solvency is cutting benefits.”
President Joe Biden is also seeking the opportunity to tie Johnson to reducing benefits. A Biden campaign spokesperson released a statement after Johnson’s election saying the new speaker wants to “gut Social Security and Medicare.”
Doing nothing, however, is not an option, said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and a former public trustee for Social Security and Medicare. But he’s skeptical that a debt commission will find bipartisan solutions.
Addressing Social Security’s massive financial issues will require implementing proposals similar to those of the Republican Study Committee, as well as tax increases and other measures, he said.
“The amount of savings you need to maintain solvency far, far exceeds anything in the RSC proposal,” Blahous said. “So if you want to keep Social Security solid, you have to do all that stuff and a lot more.”
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