When Mike Johnson was elected House speaker, one of his first actions was to announce plans for a bipartisan debt committee to address what he called “the greatest threat to our national security.”
Social security and Medicare supporters felt a chill when hearing the news.
This is because, back when Johnson was in charge, the Republican Study Committee pushed for reforms to the entitlement programmes that the organisation thought would prevent them from going bankrupt. A source close to the Speaker has revealed that he plans to include a discussion of the rapidly increasing costs of Social Security and Medicare in the debt commission’s deliberations. In a statement released last week, Johnson said he would “not predetermine the outcome” of the commission’s deliberations.
However, supporters argue that the committee’s ideas are really just covert attempts to reduce benefits by, among other things, increasing the retirement age and decreasing the generosity of the payments.
What is not debatable is the following: The national debt and the health care programmes Medicare and Social Security are both under jeopardy. However, lawmakers are reluctant to tackle these budgetary issues because of the harsh decisions that will undoubtedly be required to resolve them.
The most recent annual report from Social Security’s trustees warns that the programme will run out of money before it can pay out in full in 2034 unless Congress takes action. When that happens, the program’s ongoing income will only be enough to pay for 80% of the benefits that have already been accrued.
The Medicare budget crisis is worse than previously thought. According to the annual report of Medicare’s trustees, the hospital insurance trust fund, also known as Medicare Part A, will only be able to pay scheduled benefits in full until the year 2031. Medicare’s current ability to pay for planned benefits will drop to 89% at that time.
The Congressional Budget Office estimates that by the conclusion of the 2033 fiscal year, the national debt will have increased by $22.1 trillion, reaching a total of $46.7 trillion. By the end of the fiscal year 2028, the debt is expected to reach a record 107% of GDP, and by the end of the fiscal year 2033, it will have risen to 119% of GDP. As the population of the United States ages, it is expected that spending on Social Security and Medicare will skyrocket, increasing the urgency with which lawmakers must address these issues.
The Republican Party’s Plan of Action
For a long time, the Republican Study Committee has pushed for reforming entitlement programmes significantly.
During Johnson’s tenure as leader, the organisation presented a controversial budget plan for the 2020 fiscal year. It proposed an increase in the normal retirement age from 67 to 69, and an increase in the early retirement age from 62 to 64.
Retirees with yearly earnings of $85,000 or $170,000 for a couple would no longer get the cost-of-living adjustment, and the inflation index used to calculate the adjustment would be changed to limit the rate of rise.
Plus, the committee would change the benefits formula for new retirees to limit the rate of rise for those who had greater incomes, while raising benefits for those with lower wages.
As for Medicare, the group would raise the eligibility age to equal that of Social Security’s full retirement age and then adjust it to life expectancy. Critics have labelled the “premium support” it proposes to help enrollees pay for private health insurance plans “vouchers,” and hence the idea will boost premiums.
Budget estimates show that these reforms, along with others, would save $756 billion in Social Security costs over a decade and $1.9 trillion in Medicare costs.
Advocated measures, such as payroll tax increases, are absent from the recommendations. The committee claims that raising taxes is not the answer to saving Social Security.
In 2018, as the committee’s chair-elect, Johnson said at an American Enterprise Institute meeting, “This can can no longer be kicked down the road,” referring to Congress’s responsibility to address entitlement programmes, Medicaid, and interest on the national debt.
Johnson now has the ability to bring these issues before the House, albeit finding bipartisan answers seems unlikely.
According to a source close to the speaker’s office, “the bipartisan debt commission that he plans to establish will handle a lot of these programmes that are in funding trouble.” We are well aware that these programmes are headed into bankruptcy; thus, immediate action is required to save them. Getting to the bottom of that is a top objective for the debt commission.
Johnson, speaking to the press on Thursday, stated that the committee will include “very thoughtful people on both sides of the aisle, in both chambers.”
When asked about the commission’s deliberations, he replied, “I believe it’s also an important principle that the speaker not predetermine the outcome of that or dictate, you know, objectives or benchmarks.”
Issues raised by advocates
However, proponents counter by saying that lawmakers might use the debt committee as an alibi for agreeing to benefit cuts.
“The new speaker has made it clear he is not a friend to seniors, Social Security, or Medicare,” said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. Reducing payouts is his solution to the problem of Social Security’s long-term solvency, he says.
Vice President Joe Biden also wants to link Johnson and benefit cuts. In a statement issued following Johnson’s victory, a Biden aide said that the new speaker intends to “gut Social Security and Medicare.”
However, according to Charles Blahous, a former public trustee for Social Security and Medicare and senior research strategist at the Mercatus Centre at George Mason University, doing nothing is not an option. However, he has doubts that a commission on the nation’s debt can agree on answers.
Implementing suggestions similar to those of the Republican Study Committee, together with tax increases and other measures, will be necessary to address Social Security’s significant financial challenges, he added.
A lot more money needs to be saved than is included in the RSC proposal, Blahous stated. “So if you want to keep Social Security solid, you have to do all that stuff and a lot more.”