The last in a four-part series
Republicans are discovering there’s yet another reason Medicare and Social Security are considered the third rail of American politics. Without President Trump’s support, their long-term party goal of reforming the nation’s largest social safety net programs, which face a looming crisis of dire proportions, has been left squarely on the back burner.
The split within the party is well known. Most Republicans want to address Medicare and Social Security to prevent their collapse and as a means to cut deficits and avoid fueling the nation’s debt. Trump, on the other hand, differentiated himself from other Republicans during his campaign with promises to preserve those programs as they are.
Republican lawmakers were hopeful early this year that the president would come around to the their view that entitlement reform is a budgetary necessity, and his support for their health care bill, which includes a major overhaul of Medicaid, was considered a positive sign.
But mired in the months-long legislative fight to pass their Obamacare replacement and with another major battle over tax policy looming, few expect any action this year. Republicans have also struggled to find consensus on Medicaid and on smaller packages of mandatory cuts in the House health care bill. Those struggles make clear that tackling entitlements would be a significant lift for the party.
The pending problem the nation faces was underlined Thursday by the release of annual reports from the Medicare and Social Security trustees predicting that Medicare would become insolvent in 2029 and Social Security would suffer the same fate in 2034. More than 50 million people received retirement benefits from Social Security in 2016, and another 10 million received disability benefits; 56.8 million people received benefits from Medicare last year.
While Trump’s victory shifted core Republican orthodox in some policy areas, his opposition to changes in these programs has not had the same impact. Most congressional Republicans stand by their desire to see them put on stable financial footing.
Rather than force the issue now, however, they are biding their time, continuing to nudge the administration on their views and relying on allies in the White House – notably Office of Management and Budget Director Mick Mulvaney – to persuade the president.
The expectation, according to conversations with more than a dozen lawmakers, as well as outside budget experts, is that the president’s promise eventually will run into a budgetary brick wall.
Paul Ryan and others have focused on health care and tax reform as the GOP controls the federal government, which the speaker has labeled a once-in-a-generation opportunity. But delaying action on entitlements means that when, and indeed if, Republicans push those reforms, they will be doing so even closer to the programs hitting insolvency.
In an interview with RealClearPolitics in June, Ryan reiterated his long-held goal to shift Medicare into “premium support,” in which the government provides a set payment so recipients can purchase coverage either from private insurers or the government. But Trump doesn’t currently back such a plan, and his budget proposal earlier this year didn’t contain changes to Medicare.
“I think that’s the right way to fix it,” Ryan said. “We’ve got more work to do with the president on that point.”
“The sooner you get on these problems, the better it is for anybody else involved. The more you procrastinate, the uglier the solutions must become."
He added: “The sooner you get on these problems, the better it is for anybody else involved. The more you procrastinate, the uglier the solutions must become. And we’re just going to keep working on it.”
Meanwhile, Republicans are struggling to find consensus on their 2018 budget, which is months behind schedule, but they expect to include Medicare reforms along the lines of what Ryan laid out when he chaired the House Budget Committee. Similar plans were also in the policy white papers Republicans released last year.
“We’re looking at mandatory spending, I will tell you that,” current Budget Committee Chairman Diane Black told reporters in June. “We’ll just give you all that information once we have it all tied and put a bow around it.”
For now, the focus is on Medicare, a more urgent fiscal problem and one that's potentially easier than Social Security to address politically. The new Medicare trustees’ report indicated that while the program’s trust fund is likely to run a surplus for the next several years, deficits are expected after 2022 -- and the fund would be depleted by 2029.
That wouldn’t necessarily spell doom for program recipients, but it would be a major breaking point. The report suggested that in 2029, when the trust fund is emptied, annual revenues would cover 88 percent of costs, though that could drop to 81 percent by 2041 without fixes. Access to health care services for recipients would “rapidly be curtailed,” according to the report, and the trustees recommended that Congress and the executive branch "work closely together with a sense of urgency" to address the looming depletion.
The combined trust fund for Social Security, on the other hand, is expected to hit depletion by 2034, according to the trustees report released Thursday, at which point annual revenues could only pay about 77 percent of current benefits.
Trump has already diverged from his campaign promise on entitlements in several ways. In an oft-cited May 2015 tweet, he promised “no cuts” to Social Security, Medicare and Medicaid. Yet the health care bill that passed the House in May of this year cut Medicaid by more than $800 billion over the course of a decade compared to current law, according to the Congressional Budget Office (the Senate version cuts the program by $772 billion over the same time period).
And in his budget released in May, the president proposed $70 billion in cuts to the Social Security Disability Insurance program. Mulvaney argued that those cuts didn’t violate the president’s pledge on Social Security because -- though never explicitly stated -- Trump was referring to retirement benefits.
Lawmakers who hope the president will come to their way of thinking on entitlements viewed those cuts positively, and believe Trump could be flexible on the larger safety net programs.
“He’s actually touched Social Security a little bit with his budget proposal, which I think is a good sign,” Rep. Tom Cole told RCP shortly after the president’s budget was released. “I’m very supportive of what he’s trying to do with Social Security disability. But sooner or later you’re going to have to get to Medicare and Social Security as well. They’re just too big of items to leave alone.”
“I’m very supportive of what [the president is] trying to do with Social Security disability. But sooner or later you’re going to have to get to Medicare and Social Security as well."
As administration officials came to Capitol Hill to defend the president’s budget, many lawmakers on both sides of the aisle expressed opposition to the steep spending cuts proposed for popular programs such as medical research at the National Institutes of Health. They also continued to lay the groundwork on entitlement spending changes.
On July 21, Mulvaney testified before a House appropriations subcommittee, and Rep. Kevin Yoder asked about the methods – steep cuts and rosy economic growth projections – used to balance the budget proposal.
Mulvaney said that he sat down with Trump in the Oval Office four times to review potential areas to trim mandatory spending.
“At the end of the day, he went down a list and said yes, yes, no, no, yes, no, no,” Mulvaney told the committee. “And the ones that were ‘no’ were Social Security retirement and Medicare because, he said, ‘I promised people when I ran for office that I wouldn’t change those.’”
Mulvaney said that when he left the meeting with Trump, he doubted they could balance the budget without addressing those programs, and was surprised that they did. (Democrats, and some Republicans, criticized the budget as using gimmicks, including the growth projections, to achieve balance. CBO estimates released Thursday predicted federal deficits would shrink under Trump's budget, but that it would not balance in 10 years.)
Later in the hearing, Mulvaney told Republican Rep. Chris Stewart that he did not think the administration could balance the budget again next year without addressing Social Security or Medicare.
Stewart, in a later interview with RCP, said those programs represent one of the “fundamental disagreements” he has with the president, but said he is hopeful they could change the Trump’s mind. Stewart said he expected that the third and fourth years of Trump’s presidency would be the right time to tackle the issues.
“What I wish is that he’d leave it on the table saying we’ll come back and we’ll address that when we can,” Stewart said. “Some prodding and some gentle reminding from those of us who think that this is a really important issue is important not just for the president but for others too.”
Yoder, for his part, said reform would likely require bipartisan agreement. He lamented the missed opportunity to address the programs’ long-term solvency when Republicans controlled Congress and Democrats controlled the White House, though it wasn’t for lack of trying. The parties created a super committee to address the issue in 2011, but that effort failed, resulting in across-the-board sequestration cuts that most lawmakers loathe.
At this point, the partisan rancor in Congress makes any major deal unlikely, particularly if Republicans are successful in repealing the Affordable Care Act and overhauling Medicaid.
Increasingly, many Democrats are beginning to push for a Medicare-for-all solution to the nation’s health care, a proposal touted by Sen. Bernie Sanders during his presidential campaign. It could be difficult, given support among the party’s progressive base for universal Medicare, to forge a bipartisan compromise.
Yet bipartisan solutions aren’t on anyone’s radar anyway. Republicans have chosen to pursue their most significant legislative goals so far this year entirely without the support of Democrats by using a budgetary process that avoids a filibuster in the Senate. In light of that, the top Democrat on the House Budget Committee told RCP that it’s incumbent on Republicans to propose entitlement solutions:
"Let [Republicans] propose something. Let them walk the plank. We’re not going to walk the plank with them in control. That’s stupid.”
“When you’re talking about Social Security and Medicare, you’re talking about who’s going to walk the plank by themselves,” Rep. John Yarmuth said. “They’re in control. If they’re so concerned about entitlements — which that’s been one of their mantras — let them propose something. Let them walk the plank. We’re not going to walk the plank with them in control. That’s stupid.”
However, Yarmuth said that if Republicans approached Democrats for bipartisan solutions, they would “absolutely” enter into discussions. He labeled Ryan’s proposals a nonstarter, and said Democrats would likely oppose anything that limited or rolled back benefits.
“If you get a balanced program where you talk about the revenue side of Social Security and cost control measures on Medicare, yeah, we’d be interested in talking about that,” Yarmuth said.
But no such discussions are happening. The 2018 midterms could swing the balance of power in Congress, and make it difficult to pursue solutions for these programs in the short time before the 2020 presidential race hits full force. And some Republicans are disappointed that there hasn’t been a push to tackle such an obvious issue.
“It’s the most foreseeable crisis in the history of humanity,” Rep. Mario Diaz-Balart said.