Veronique de Rugy: Why Would Republicans Rule Out Social Security and Medicare Reform?

When you pay attention to policy debates, you might hear arguments that you didn’t expect. These arguments can be key components of both parties’ policy platforms. It’s true with some Republicans and their newly formed party. “never touch Social Security and Medicare” position.

J.D., a newly elected GOP senator, was elected over the weekend. Vance of Ohio tweeted that the former President Donald Trump was 100% right to demand that “Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security.” Vance’s tweet was posted during the debt-ceiling battle, but Trump has been holding this position since long.

While the GOP’s good intentions in the debt-ceiling debate are admirable, it is limited because Congress only has a short time to raise the limit. This makes it impossible to reform Medicare and Social Security. These two programs need bipartisan reform. It will take time and require bipartisan action. This is not to say that these programs should be abandoned.

I can’t wait for the grand plan. “don’t touch Social Security and Medicare” Republican caucus has to address the $116 trillion over 30-year shortfall — that’s 6% of U.S. GDP — facing the two programs. Congress must take action to ensure that all benefits are paid for. This will lead to massive cuts that will impact seniors with low incomes who rely on these programs.

Vance and his friends could raise taxes to address the Social Security or Medicare deficits if they insist that benefits are not touched. For Social Security alone, when the trust fund dries out, they will have to agree to immediately raise the payroll tax from 12.4% to 15.64% — or close to a 25% tax increase. Add the Medicare tax hike to the equation and continue the process over the years until the deficit is filled.

These problems were already brewing for years, and we didn’t warn politicians about them. In 2000, around the time I began working on fiscal issues experts warned that the Social Security trust funds would run dry by 2037. This would result in painful benefits cuts. Today, the situation is even worse. The trust fund is now set to run dry by 2035.

This means that these problems shouldn’t be surprising anyone. Life expectancies were lower when Social Security was created. In 1950, more than 16 workers were available for each beneficiary. The ratio now stands at less than three workers per retiree, and it will fall to only 2.3 workers by 2035. You have a real fiscal crisis if you add to this decades-old trend of politicians buying votes by increasing benefits beyond incoming payroll tax.

It’s alarming that many Republicans are abandoning education of a population that has been brainwashed for decades with misleading soundbites such as “The Message” “You earned your Social Security benefits, so you are entitled to the benefits now promised,” Oder “There’s an account with your name on it.” This misinformation has made reform discussions very difficult.

There’s no question that retirees deserve fair treatment, but the facts are that the Supreme Court ruled in 1960 that workers do not have a legally binding right to Social Security benefits, and if Congress cuts benefits even by, say, 50%, it can do so — no matter how much anyone has paid into the program. Although it won’t, the ruling is still in force. It’s also fiction that all the benefits that have been promised were earned by workers — they weren’t. This is partly because retirees get their taxes from workers and not the funds they save from the payroll taxes that they paid while working.

It’s not possible to believe that Medicare and Social Security can be saved. Stranger still, many Republicans are willing to save these programs and put Medicaid on the block. Medicaid must be reformated too. However, it should still serve poor people. Currently, seniors who have Medicare and Social Security are more likely to be in the top quintile of income than younger Americans. These guys want to reduce Medicaid benefits for the poor while subsidizing wealthy boomers by taking taxes from the very poor. Yikes.

The GOP’s transformation to the party of big and financially reckless government is progressing at an alarming pace.

Veronique de Rugy holds the George Gibbs chair in Political Economy at George Mason University and is a senior researcher at the Mercatus Center. You can learn more about Veronique and see cartoons and features from other CreatorsSyndicate writers at www.creators.com.

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