Democrats’ Latest ‘Mediscare’ Gambit Is An Empty Threat

Stop me if you’ve heard this one before: Democrats are claiming Republicans have put the Medicare program in jeopardy. As usual, the allegation amounts to a combination of speculation and an empty threat.

The latest version claims that, because the “big, beautiful” reconciliation bill will increase the deficit, automatic spending reductions will hit Medicare. But in recent years, lawmakers of both parties have moved to cancel the automatic reductions with regularity — and you can bet dollars to donuts they will do so again.

Implications of Reconciliation

The most recent claim came via a letter from the Congressional Budget Office (CBO), requested by several senior congressional Democrats. CBO noted that, because the new law will increase the deficit by roughly $3.4 trillion in the coming decade, the measure could trigger an automatic sequester under the Statutory Pay-As-You-Go (PAYGO) law enacted in 2010.

PAYGO requires Congress to offset tax cuts or spending increases with commensurate spending reductions or revenue increases, to avoid further increases in federal deficits and debt. If, by the end of the year, lawmakers do not enact offsetting tax increases or spending reductions to “pay for” the estimated $3.4 trillion deficit increase caused by the reconciliation measure, then automatic spending reductions (i.e., the sequester) will kick in under Statutory PAYGO. (The sequester exempts Social Security and certain other programs; Medicare spending is subject to a maximum 4 percent reduction under this sequester.) 

Arcane Congressional Rules

Lawmakers can always waive or otherwise change the sequester requirement under Statutory PAYGO. However, they cannot do so under budget reconciliation, for reasons related to congressional procedure. The reconciliation process occurs when the House and Senate Budget Committees instruct other congressional committees (e.g., House Ways and Means, Senate Finance, etc.) to make changes to programs within their jurisdiction to accomplish budgetary goals (e.g., raise or lower revenue, raise the debt limit, etc.). 

But Statutory PAYGO lies under the jurisdiction of the House and Senate Budget Committees. And the House and Senate Budget Committees cannot give reconciliation instructions to themselves, meaning that any waiver of, or change to, Statutory PAYGO cannot occur via the reconciliation process.

In other words, while Republicans passed their agenda bill on a party-line via reconciliation, which is not subject to a filibuster, they will need 60 votes, and therefore Democrat support, to modify or waive PAYGO. That gives Democrats leverage in theory, but it hasn’t worked out that way in practice.

Spending Reductions Waived

As CBO noted in a June letter requested by Senate Budget Committee Chairman Lindsay Graham, R-S.C., lawmakers have always waived Statutory PAYGO, such that the spending reductions called for by the law have never taken effect. Democrats did it for Republicans after Republicans passed the Tax Cuts and Jobs Act via budget reconciliation in President Trump’s first term, and Republicans helped out Democrats after they passed the American Rescue Plan Act and Inflation (Reduction) Act, both via reconciliation, under the Biden administration.

So as much as Democrats holler about how Republicans will “cut Medicare,” it’s probably not going to happen. Think about it: If Democrats spend the next few months banging on about “harmful sequester cuts to Medicare,” Republican leaders can just put a standalone bill waiving the Statutory PAYGO reductions on the Senate floor. What are Democrats going to do then — vote against it, and allow that which they attacked Republicans for to take place on their watch? Not bloody likely.

Bipartisan Spinelessness

Mind you, none of this is to say lawmakers should bail each other out of their fiscal irresponsibility. Republicans should have passed more spending reductions — including reductions to Medicare, which is functionally insolvent — in the “big, beautiful” bill, because a deficit-neutral bill would have eliminated the sequester threat entirely. But Congress continues to make drunken sailors look financially responsible, which is why Democrats’ “Mediscare” rhetoric constitutes an empty threat.

Before Democrats passed their Covid spending binge via reconciliation in 2021, I warned that the sequester could come back to bite the party. That scenario was vaguely plausible then, but subsequent events have rendered Statutory PAYGO and the blunt instrument of the sequester effectively impotent. When it comes to potential spending reductions via the sequester, congressional Democrats are bluffing, and everybody knows it.