Pledges from House and Senate GOP leaders not to touch Social Security and Medicare as they gear up for a budget showdown with President Joe Biden have put the party in a difficult position.
Throughout the years, Republicans have said entitlement programs need reforms to be financially sustainable, but now they are internally divided over whether now is the right time to propose restructuring the safety net programs that have long been considered a political third rail, and many have tried to distance themselves from past proposals to privatize Medicare and Social Security. Biden, meanwhile, has capitalized on painting Republicans as the party that intends to slash benefits.
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“Social Security and Medicare are cornerstones of American retirement planning, but President Biden’s own trustees have warned that the programs will face funding shortfalls by 2034,” Sen. Chuck Grassley (R-IA) said in a statement to the Washington Examiner. “Congress needs to have an honest bipartisan discussion about how we can prevent automatic benefit reductions for existing retirees and provide workers and future beneficiaries with certainty.”
House Speaker Kevin McCarthy (R-CA) has said Republicans are committed to strengthening entitlement programs but has remained vague over how that would be achieved, claiming that cuts to Medicare and Social Security are off the table as the House GOP majority negotiates with Biden over raising the debt ceiling.
Many Republicans favor adjusting the old-age entitlement programs, especially by keeping benefits unaltered for current beneficiaries but changing them for the future.
The Republican Study Committee, the GOP’s largest caucus, last year proposed raising the age of eligibility to 67 from 65 for Medicare, which would align with the full retirement age for Social Security, as well as moving to a “premium support” model for financing benefits — meaning seniors would receive subsidies from the government that they could apply to a private plan or to a plan meant to provide traditional Medicare benefits.
The differences among House Republicans will now come to the fore as they try to sort out their differences to pass a budget in response to Biden’s budget proposal, which was crafted in large part to avoid changes to Medicare benefits.
Assurances that changes to Medicare benefits are off the table are a stark shift from former President George W. Bush’s push to privatize Social Security and proposals under former GOP Speaker Paul Ryan to turn Medicare into a voucher program. Some Republicans have attributed the change of tune to leadership changes and the political environment.
Former President Donald Trump, who is making another White House run in 2024, has long resisted entitlement reforms, which put him at odds with Ryan. Trump has warned Republicans not to touch Medicare and Social Security in current debt ceiling discussions and has even criticized potential 2024 primary challenger Gov. Ron DeSantis (R-FL) for his past support for privatizing the programs, calling him a “wheelchair over the cliff kind of guy, just like his hero, failed politician Paul Ryan,” in an all-caps Truth Social post last month. Famously, a 2011 attack ad depicted a Ryan lookalike pushing a wheelchair-bound elderly woman off a cliff as a commentary on his budget proposals.
“I think a possible outcome is that nothing will happen here in the debt limit increase and we’re not going to be able to pass fundamental reforms to Social Security and Medicare in this political environment we’re dealing with leading up to the [2024] presidential election,” said William Hoagland, a senior vice president at the Bipartisan Policy Center. “We have to sit down in an orderly manner, Republicans and Democrats, and think through some of these.”
Some Republicans have suggested reforms to Medicaid, a federal and state program that helps cover medical costs for some people with limited income and resources, may be more feasible in the current political climate, while others have disagreed. GOP proposals for the program have centered on adding work requirements, capping spending, and repealing a provision under Obamacare that expanded eligibility.
It comes as Medicaid enrollment has reached record highs during the COVID-19 pandemic due to policy that allowed some people who may not have met the qualifications for the programs to remain enrolled under the public health emergency. A number of Republican-led states have adopted Medicaid expansion bills in recent years with federal financial incentives, which could put federal lawmakers in a tough spot with states if they go after reforms.
Debates over the future of entitlement programs come as it becomes increasingly clear that the programs are unsustainable as they stand now with forecasts from the nonpartisan Congressional Budget Office showing spending growth for the programs will outpace federal tax revenues over the next decade.
In 2022, major entitlement programs, including Medicare, Medicaid, and Social Security, consumed nearly half of all federal spending and are projected to continue growing with medical costs rising and an aging population. Reserves for Medicare’s Hospital Insurance Trust Fund, which pays for hospital services such as inpatient care, are projected to be depleted by 2028, at which point the program would only be able to pay roughly 90% of hospital coverage. Meanwhile, the Social Security Board of Trustees projects that the program costs will rise by 2035 so that taxes will be enough to pay for only 75% of benefits.
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Biden’s plan, which he says would extend its solvency by 25 years, calls for increasing the Medicare payroll tax rate from 3.8% to 5% on income exceeding $400,000 per year, as well as redirecting funds from an existing investment tax from the general fund to the Medicare trust fund.
“For decades, I’ve listened to my Republican friends claim that the only way to be serious about preserving Medicare is to cut benefits,” Biden wrote in an op-ed for the New York Times. “The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits.”
