Buoyed GOP ready to tackle entitlements
Strategy poses enormous risks to Republicans, elderly
As the tax cut legislation passed by the Senate early Saturday hurtles toward final approval, Republicans are preparing to use the swelling deficits made worse by the package as a rationale to pursue their long-held vision: undoing the entitlements of the New Deal and Great Society, leaving government leaner and the safety net skimpier for millions of Americans.
House Speaker Paul Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Donald Trump told a Missouri rally last week, “We’re going to go into welfare reform.”
Their nearly $1.5 trillion package of tax cuts, a plan likely to win final approval in the coming days, could be the first step. But their strategy poses enormous risks, not only for millions of Americans who rely on entitlement programs but for Republicans who would wade into politically difficult waters, cutting popular benefits for the elderly and working poor just after cutting taxes for profitable corporations.
“The way to get at fixing the debt is to feel like everybody is willing to put something on the table,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group. “Once you have one side grab all it could, you’re never going to have the other side show up,”
Even if the tax cut sparks the kind of economic growth that Republicans advertise, the tax bill will increase the deficit by $1 trillion over 10 years, the nonpartisan congressional Joint Committee on Taxation said.
And it was passed along sharply partisan lines, offering nothing to Democrats, and leaving them with no obligation or incentive to negotiate cuts to Medicare, Medicaid and Social Security, the entitlement programs that are driving up spending but also are the pride of the Democratic Party. ‘They’ve just made it harder’
For his part, Trump spent his campaign promising not to cut Medicare and Social Security. And Republicans probably will find, as they did when they failed to repeal the Affordable Care Act, that the public rises up to defend the programs they are trying to cut. Whatever political boost the Republicans could get for passing a tax cut could evaporate fast.
“Republicans are going to find that Democrats treat this tax bill the way Republicans treated Obamacare — it’s not trusted by people on the other side of the aisle,” said former Sen. Judd Gregg, who was chairman of the Budget Committee and a member of the Simpson-Bowles commission, a bipartisan group of lawmakers and budget experts that produced a deficit reduction plan in 2010. “It will become a target, a rallying cry, which is unfortunate, because good tax reform, when done right, is not only good for the economy, it’s good for the parties.”
Many of the Republicans’ allies have criticized the bill for adding to the deficit and not dealing with the costs that were already driving up the government’s red ink.
“Republicans have been telling themselves for years that they wanted to get into power so they
“Republicans are going to find that Democrats treat this tax bill the way Republicans treated Obamacare — it’s not trusted by people on the other side of the aisle.” Former Sen. Judd Gregg
could balance the budget, reduce the debt, cut spending and fix entitlements,” MacGuineas said. “They’ve just made it harder, not easier.” Change for future retirees
For weeks, Democrats and their allies have been accusing Republicans of a “two-step” deceit, warning that they would cut taxes now and then use the increase in the deficit they caused to demand entitlement cuts later.
“When you run up the deficit, your next argument will be, ‘Gee, you’ve got a large deficit,’ ” Sen. Bernie Sanders of Vermont, a former Democratic presidential candidate, said in an interview.
Now Republicans are beginning to acknowledge as much. Ryan said at a town hall-style meeting last month that Congress had to spur growth and cut entitlements to reduce the national debt.
The Republican tax plan, he said “grows the economy.” But, he added, “we’ve got a lot of work to do in cutting spending.”
Sen. Marco Rubio, R-Fla., was more specific Wednesday, telling business leaders that the tax cuts were just the first step; the next is to reshape Social Security and Medicare for future retirees.
“Many argue that you can’t cut taxes because it will drive up the deficit,” he said. “But we have to do two things. We have to generate economic growth, which generates revenue, while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.”
The Congressional Budget Office projects that spending on Social Security, Medicare and Medicaid will cost the federal government $28.6 trillion through 2027. The tax cut, estimated at nearly $1.5 trillion, makes the problem only mildly worse.
But if that trillion-dollar boost to the government’s yawning fiscal hole is comparatively small mathematically, it could add up to much more politically if it keeps Democrats away from the negotiating table.
And even if Republicans do not pursue changes to entitlements, the tax bill will trigger pay-asyou-go requirements that Congress cut spending. That would be a particularly big hit to Medicare, which would face a $25 billion cut for the current fiscal year. Groups like AARP, the lobby for older Americans, warn that it would force doctors and hospitals to turn away patients because reimbursements would be cut so drastically.
Ryan and Sen. Mitch McConnell, R-Ky., the majority leader, released a statement Friday saying that the pay-go cuts “will not happen” because Congress would waive the law, as it has in the past. But they will need Democratic votes to do that, in a climate that is unusually partisan.
Regardless of whether Republicans can waive these cuts, David Certner, legislative counsel for AARP, said, “You know they’re going to come back and say, ‘We need to make more cuts to deal with the growing debts and deficit.’”