It seems no one wants to cut Social Security or Medicare benefits.
\nNot President Joe Biden, who is already telling voters his upcoming federal budget proposal will \u201cdefend and strengthen\u201d the programs. Not Republican House Speaker Kevin McCarthy, who has declared cuts to the programs off the table in negotiations to raise the federal debt limit.
\nThere\u2019s just one glitch with these declarations: Social Security won\u2019t be able to pay out its promised benefits in about a dozen years, while Medicare won\u2019t be able to do so in just five years. Economists have done the projections and say both programs will drive the national debt higher in the decades to come, forcing teeth-gritting choices for the next generation of lawmakers.
\nHere\u2019s a breakdown of the dilemma, the potential fixes and the harsh politics around Social Security and Medicare:
\nTHE CHALLENGE
\nIt\u2019s a math problem that requires a political solution.
\nPayroll taxes largely fund Social Security and Medicare. They generally get deducted from workers\u2019 paychecks, which is why Biden, a Democrat, says people are merely getting back what they\u2019ve already paid into the system.
\nBut as more baby boomers age and retire, there are more beneficiaries and not enough tax revenue to fund the programs. Payroll taxes are expected to generate $1.56 trillion this year, but the combined costs of Social Security and Medicare are likely to be $2.16 trillion, according to a Congressional Budget Office report last week. The office warned in its report that Social Security benefits may need to be cut even earlier than past projections, beginning in 2032.
\nCBO Director Phillip Swagel said Friday at a Bipartisan Policy Center event that \u201cbenefits today are being paid in full as promised, drawing down on the Social Security trust fund.\u201d But when the government is unable to pay full benefits, \u201cthat\u2019s a challenge,\u201d he said.
\nThe number of people enrolled in Medicare has more than tripled to roughly 65 million since its inception in 1966. More than 10 million new retirees and disabled people joined in just the past decade, according to data from the Centers for Medicaid and Medicare Services.
\nThe shortfall in tax revenues combined with a rising number of recipients would eventually lead to Social Security\u2019s trust fund being unable to fully pay benefits in 2035, a Social Security and Medicare trustees report predicted last June, though the CBO said it could happen sooner. Medicare\u2019s trust fund would be unable to pay full benefits starting in 2028.
\nThis forces the inevitable choice of whether to shore up the trust funds\u2019 finances or reduce people\u2019s benefits. Continued delays by Congress and the president in addressing this math problem could narrow the number of potential fixes.
\nWHAT ARE THE SOLUTIONS?
\nThere is basically some combination of four options:
\n\u2014 Raise taxes.
\n\u2014 Change benefits such as the eligibility age.
\n\u2014 Cut costs.
\n\u2014 Rely more on general revenues to cover the gap, which could mean higher budget deficits or cuts to other programs.
\nBiden took a step last year with his Inflation Reduction Act, which would allow Medicare to negotiate lower prices on a handful of drugs and charge drug companies when they raise the price of drugs faster than inflation. The law also makes vaccines free, caps monthly out-of-pocket insulin costs at $35 and limits out-of-pocket drug expenses at $2,000 starting in 2025.
\nThe CBO said the prescription drug components of the law would save $237 billion over 10 years, prompting some Republican lawmakers to say it was a spending cut that would dig into pharmaceutical companies\u2019 profits, forcing them to limit how much they spend developing new treatments. But the law aims to lower the cost people pay for medication, rather than ax benefits.
\nDemocrats are also trying to rein in spending on the increasingly popular -\u2013 and expensive -\u2013 Medicare Advantage program, a network of private insurance plans that are reimbursed by the government. Recently, 70 Democrats signed a letter to the president asking his administration to crack down on scams and wasteful spending in the program, which federal investigators say has cost taxpayers billions of dollars.
\nSen. Mitt Romney, R-Utah, has pushed legislation that would create bipartisan committees to look at ways to salvage the Social Security and Medicare trust funds. The bill has gone nowhere but has limited bipartisan support, including from Senate Democrats Joe Manchin of West Virginia and Mark Warner of Virginia.
\nPayroll taxes were capped last year at $147,000 \u2014 meaning no one paid the taxes after surpassing that threshold. In 2019, Rep. John Larson, D-Conn., proposed a bill that would reinstitute the payroll tax at earnings above $400,000.
\nLast year, members of the House Republican Study Committee proposed raising the age at which someone could qualify for Social Security and Medicare. Right now, people can access their full Social Security benefits at 67, an age minimum that\u2019s increased by two years since the program was first established nearly 90 years ago. You must be at least 65 to access Medicare.
\nLast year, Sen. Rick Scott, R-Fla., laid out a plan to require Congress to reconsider all federal laws every five years \u2014 leading to criticism by Biden that Social Security and Medicare would be cut. That idea has received an ice-cold reception with Senate Minority Leader Mitch McConnell, R-Ky, saying it will \u201cnot be part of our agenda.\u201d
\nAfter several months of flak, Scott on Friday revised his plan to specifically exclude Social Security and Medicare.
\nThe CBO has also laid out nearly 60 policy options that could save the federal government billions of dollars on Medicare, including higher monthly premiums for some older and disabled adults.
\nTHE POLITICS ARE TOXIC
\nIn his State of the Union address, Biden got boos from GOP lawmakers when he said that some Republicans want to cut spending for the programs. It led to an improvised standing ovation for seniors as both parties on the spot committed to avoiding any cuts to Social Security and Medicare.
\nPut simply, voters like low taxes and generous benefits. This means it can be politically suicidal to overhaul either program. Any change can be used against a lawmaker seeking reelection, especially as 2024 looms. For the past two weeks, Biden has been giving speeches in key states such as Wisconsin and Florida in which he warned that some Republicans would gut the programs, despite the GOP denials.
\nWhy are the politics so bad?
\nIt\u2019s because of the composition of the electorate. AP VoteCast found that nearly six in 10 voters in last year\u2019s midterms were older than 50. Of that group, three in 10 were 65 or older. This means that a dominant bloc of voters already benefit from these programs or are on the verge of doing so.
\nREFORM IS POSSIBLE
\nGo back 40 years to 1983.
\nPresident Ronald Reagan, a Republican, and House Speaker Tip O\u2019Neill, a Democrat, struck a deal to extend the life of Social Security, which was facing insolvency. The amendments to the program raised the retirement age, delayed the cost-of-living adjustment by six months and mandated that government employees start paying into Social Security, among other changes.
\nWhen Reagan signed the law on April 20, 1983, he said: \u201cThis bill demonstrates for all time our nation\u2019s ironclad commitment to Social Security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago. It assures those who are still working that they, too, have a pact with the future.\u201d
\nIn the 1984 elections, there was little political fallout. Reagan won a second term in a landslide, while Democrats held onto the House.
\nTHIS IS A GLOBAL PROBLEM
\nIt\u2019s not just the U.S. There\u2019s pushback in other countries amid efforts to restrain costs tied to an aging population.
\nThere have been repeated protests in France over French President Emanuel Macron\u2019s plans to raise the minimum retirement age for a full state pension from 62 to 64. Nearly 1 million people marched in Paris, Nice, Marseille, Toulouse, Nantes and other cities on Feb. 11, with Parisian police officers saying they arrested eight people for violations that included vandalism and possession of a firearm.
\nIn the Chinese city of Wuhan last week, seniors belted out the communist anthem \u201cThe Internationale\u201d in protest of the government cutting health care benefits.
\nIn a recent analysis for the International Monetary Fund, Harvard University\u2019s David Bloom, an economics professor, and Leo Zucker, a research assistant, said that aging worldwide creates \u201ca colossal set of health, social, and economic challenges in the coming decades.\u201d They warned about the costs of inaction if there are not enough workers to fund health care benefits for older people, leading to more disease and a lower quality of life.<\/p>\n
Apnews<\/p>\n
Tags\uff1aSocial Security and Medicare<\/p>\n","protected":false},"excerpt":{"rendered":"
It seems no one wants to cut Social Security or Medicare benefits. Not President Joe Biden, who is already telling voters his upcoming federal budget proposal will \u201cdefend and strengthen\u201d the programs. Not Republican House Speaker Kevin McCarthy, who has declared cuts to the programs off the table in negotiations to raise the federal debt limit. There\u2019s just […]<\/p>\n","protected":false},"author":5,"featured_media":6154,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1154],"tags":[1730,2389,1746],"class_list":["post-6153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trending","tag-medicare","tag-security","tag-social"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/6153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6153"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/6153\/revisions"}],"predecessor-version":[{"id":6155,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/6153\/revisions\/6155"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/6154"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}