Cuts loom in federal social programs
When it comes to the nation’s long-term spending on social programs like Medicare, Medicaid and Social Security, Republican leaders are selling the people of the United States either a terrible lie or a terrible truth.
They promise to cut the programs, in their proposed budgets and tax-cut legislation, but they seem to do so knowing the cuts cannot be enacted. Yet the finances of our big social programs are increasingly challenged, and something really does need to change. And the danger is that when the money runs short enough, the only option other than benefit cuts will be huge tax increases that would face tremendous opposition. At that point, the benefit cuts the Republicans keep promising in their draconian budgets that seem so unlikely now could come to fruition.
Medicare is scheduled to run out of money in 2026. Social Security is set to run out in 2034. That means the programs would be able to pay only a percentage of promised benefits at those points — 77 percent for Social Security and 91 percent for Medicare. And those percentages would keep decreasing as the ratio of healthy young workers to retirees decreases. In 1950, there were 16 workers contributing to Social Security for every person getting benefits. By 2013, there were only 2.8 people paying in for every beneficiary. By 2040, according to federal projections, the ratio will be 2:1.
In June, House Speaker Paul Ryan again introduced a deficit-reduction plan that would force Congress to cut Medicare spending by more than $500 billion over the next decade and Medicaid spending by $1.5 trillion. Even Social Security would be cut by $4 billion. And that’s just the beginning. There’s also at least $302 billion in “discretionary” spending cuts over the next decade, which would mean slashing food stamps and the Supplemental Security Income program that provides for blind and disabled citizens as well as impoverished children.
This is just a proposal. But it’s significant. It was via such a plan, passed into law, that Congressional Republicans created the space for their tax plan.
Last year, to pass President Donald Trump’s massive tax cut, Congress had to approve a spending plan promising $1.5 trillion in spending cuts over 10 years. That’s how the “money” was found to offset the tax cut.
So there is law in place that calls for $472 billion in cuts from Medicare and $1 trillion slashed from Medicaid over a decade. There is a general consensus that those cuts are a fantasy, just like Ryan’s annual budget plan.
Economists, almost without exception, agree that the tax cuts won’t spur an economic boom to produce the increased tax revenues Trump and the GOP claim will materialize. And Republicans want to stem the flow of even legal immigrants, a group whose youth and high birthrates can bring the ratios of workers to retirees back into sustainable balance, a main key to funding these programs going forward.
These budget plans, whether they turn out to be imaginary or devastating, are doing nothing to solve one of our nation’s most pressing challenges. And those challenges, manageable if we address them now, will be all but impossible to conquer if we wait.