Social Security, Medicare Cuts Sidelined in Debt-Ceiling Talks – WSJ
Programs face future funding shortfalls but remain politically perilous to both parties
The Wall Street Journal, Feb 2, 2023 – Excerpts:
WASHINGTON—Republicans are backing away from proposals to reduce spending on Social Security and Medicare as they enter talks with Democrats over raising the nation’s borrowing limit, sidelining for now a politically perilous fight over how to best firm up the finances of the popular benefit programs.
The partisan wrangling underscores the difficulty of finding a legislative solution to the stark long-term financial challenges facing both programs, which provide retirement and healthcare benefits to seniors. Overhauling Social Security and Medicare carries such risk—for Democrats who favor raising taxes and for Republicans eyeing cuts to future benefits—that it has become known as the third rail of American politics, threatening to zap any politician who tries to touch it.
One notorious 2012 TV commercial showed a man who looked like then-Vice Presidential candidate Paul Ryan pushing grandma off a cliff in a wheelchair—after the Wisconsin Republican proposed Medicare changes….
Some Republicans say they would shrink deficits by giving priority to cuts to discretionary military and nonmilitary spending. But such an approach could limit Republicans’ ability to make the deep reductions many seek. As much as 92% of projected nominal spending growth is driven by Social Security, federal healthcare programs and interest payments on the national debt, according to the nonpartisan Committee for a Responsible Federal Budget.
Trustees for the Social Security Trust Funds projected last year that the program’s combined reserves would be depleted in 2035. Once Social Security’s reserves run out, revenue would pay for roughly 80% of scheduled benefits, unless Congress steps in.
Reserves for Medicare’s hospital-insurance fund are forecast to run out in 2028, at which point the program would only be able to pay about 90% of hospital coverage.
Rep. Byron Donalds (R., Fla.) said that while Social Security and Medicare are off the table for the debt-ceiling talks, that doesn’t mean that Republicans won’t propose changes down the road.
“When it comes to the debt ceiling, nobody is talking about Social Security and Medicare, nobody. Full stop,” Mr. Donalds said. “Now, for the longer-term fiscal outlook of the country, there are reforms that are going to have to be made in those programs,” he said.
Currently, Social Security taxes aren’t collected on an individual’s wages over $160,200.
To address Medicare insolvency, some Senate Democrats have considered a tax increase on high earners.
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