How Joe Biden can save Medicare and Social Security
The chattering class sees Joe Biden as an artful dodger, forced to dance around a Democratic Party’s schism. He has to placate both the traditional liberals and the hard-left progressives. The former were relieved to have him as the party’s candidate; the latter awaken each day tomake more demands of him— for Cabinet posts, for extreme policies, for attention.
This conventional wisdom pigeonholes the president-elect as Poor Old Joe, relegated to four years in which rival Democrats and resistance Republicans take turns thwarting him.
To which we offer a borrowed Joeism: Malarkey.
Every president takes office with political capital to spend, a chosen agenda to pursue and an obligation to manage the country toward a better future. There are some who speculate Biden, now78, will seek to liberate himself by declaring early on that he won’t seek reelection. We’re not in the prediction business. Butwe are in the advice business, and Biden— like the presidents who preceded him— has a shot at building a historic legacy as the one who rallied people of all political stripes to confront issues other pols duck. Among those issues: saving the social safety net for older Americans.
The Washington establishment has known for decades that Medicare and Social Security are imperiled. That was true even after 1983 when President Ronald Reagan, a Republican, and House Speaker Tip O’Neill, a Democrat, famously cut a compromise to extend the solvency of Social Security by a couple of generations. To get the deal, Reagan surrendered his demand that Americans be allowed to opt out of the program. And O’Neill disproved the adage that Democrats are frightened to speak aloud about entitlement reforms they know are inevitable.
In 2021, though, the entitlement future grows bleaker. Older people are living longer; younger people are having fewer babies. AU.S. economy that in 1950 had 16workers for each Social Security recipient nowhas only 2.8— and by the time today’s new workers retire around 2060, that ratio will plummet to 2-to-1.
The math is inexorable, the entitlements unsustainable. Federal trustees now calculate that Medicare’s main fund, covering hospital costs, will be exhausted in 2026. Yes, in five years. Social Security’s main fund runs dry eight years later, in 2034, after which incoming taxes from workers will pay only 76% of scheduled benefits.
Presidents of both major parties have given lip service to reform but— sometimes for lack of trying, sometimes because of blind resistance from the opposing party— none since Reagan has delivered fixes. A President Biden can cite the urgency Barack Obama voiced on Jan. 15, 2009, when he told the Washington Post Editorial Board that hewould rescue Social Security and Medicare:
“What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further. We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s. … You have to have a president who is willing to spend some political capital on this. And I intend to spend some.”
Except Obama didn’t spend capital on rescuing entitlements. We wrote six years later, in 2015, that all of us should “forgive young American workers who darkly assume that, because their elders behaved like selfish pigs, nothing but a heap of debt paper will be left for them.”
Two more years later, in 2017, we wrote that Obama’s successor, President Donald Trump, had given every indication that hewould be just as irresponsible toward entitlement programs. He now departs, having met our expectation.
Not one projection of doom in this editorial would surprise Presidentelect Biden. He knows. Yet as a candidate, he vacillated between pandering to voters and acknowledging that something has to change. He proposes higher Social Security benefits for low earners. And hewould extend the payroll tax— now6.2% forworkers and the same for their employers. For 2021, that taxation applies until a worker has earned $142,800. But Biden’s plan also would apply the tax to wages above $400,000. So if you earn, say, $500,000 a year, you’d pay the Social Security tax on your first $142,800 and on your last $100,000, but not on the $257,200 between those thresholds.
Candidate Biden dismissed “Medicare for All” proposals as unaffordable. Yet he has proposed lowering the eligibility age from65 to 60, while retaining the private health insurance system that now covers 180million Americans. Hospital groups oppose the eligibility age drop; shifting more people to Medicare would deprive providers of the higher reimbursements that private insurers now pay for care.
But without the political will to tell voters that the entitlement programs are on a failing trajectory, the details of how any president and Congress would tweak them are immaterial. The likely eventuality is some combination of changes to eligibility ages, payroll taxation and future benefits. Beneath that umbrella phrase sit countless possible recipes for rescue. You’ll find plenty of smart ideas at the website of the nonpartisan Committee for a Responsible Federal Budget.
The towering issue nowis whether
Biden will, like presidents before him, let the nation drift closer to an insolvency crisis or, instead, will be the leader who saves these programs.
As a senior citizen and a grandfather, Biden has the street cred to level with older Americans about the punishing math— and to give young Americans some hope that Medicare and Social Security will be there for them.
On entitlements and other crucial issues, this is how Joe Biden can take his place in history— not merely as the guy who beat the last guy, but as the American president who solved problems his predecessors wouldn’t touch.
Biden — like the presidents who preceded him — has a shot at building a historic legacy as the one who rallied people of all political stripes to confront issues other pols duck. Among those issues: saving the social safety net for older Americans.