Republicans haven’t cared about deficits and the debt for years. When he was vice president, Dick Cheney famously said deficits didn’t matter, and for all the criticism about the debt soaring on President Obama’s watch, it’s important to remember that (1.) Congress, not the president, controls the purse strings, and (2.) Republicans controlled Congress for the last six of Obama’s eight years in office. Their hands are stained in red ink just as much as, if not more than, his.
The tax deal that’s about to land on President Trump’s desk is more of the same: another $1 trillion, probably more, for our kids and grandkids to pay off.
But the GOP’s spendthrift ways are about to change, and the target for their soon-to-be frugality will be your Social Security and Medicare.
Don’t take my word for it. Just ask House Speaker Paul Ryan, who has been salivating at the prospect of whacking entitlements for years. “I think it’s important that you do comprehensive health-care entitlement reform, other kinds of entitlement reform,” he said back in 2011. Nothing was done about it, he claimed, because of then–President Obama. He made a vow: “We plan to step in the breach and provide that kind of leadership by showing the country how we would do things different.”
But isn’t there another president now, Donald Trump, who also promises to preserve entitlements? “I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid,” he tweeted in 2015.
I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid. Huckabee copied me.— Donald J. Trump (@realDonaldTrump) May 7, 2015
And Trump can be trusted, right? Look no further than the tax deal that’s nearing completion in Congress for the answer to that one. If you earn less than $75,000, your federal tax bill will go higher over the long run—after a short-term, upfront and minor tax cut. It’s this short-term cut that Trump sold—as part of his larger plan. Trump also claimed that he won’t benefit at all from tax reform—even though his own kids will get a huge new break on the estate tax (the House plan would ditch it entirely by 2024). The plan also offers, among other things, tax breaks for owners of golf resorts and private jets (gosh, who might benefit from all that? I’m drawing a blank).
When Trump says he won’t allow entitlements to be cut, well, judge for yourself whether he’s truthful.
Read: This is who gets the biggest tax cuts under the Senate’s bill
So that’s where we are. What happens next?
I’ve written before about how Social Security can be preserved. The three big ways are (1.) raising the retirement age, (2.) raising payroll taxes and (3.) raising—or eliminating—the cap on taxable wages. The first is a de facto benefit cut because it delays payments; Options 2 and 3 are outright tax hikes. All three mean pain for voters, so Trump, Ryan and Senate Majority Leader Mitch McConnell must calculate politically how much they can inflict.
As for Medicare, cuts are looming, thanks to the Senate and House tax-overhaul bills. Here’s where it gets a bit complicated. Back in 2010, Congress passed, and President Obama signed, the “Pay-As-You-Go Act” (or “Paygo”), which automatically cuts spending if deficits reach a certain threshold. The worry is that since both the Senate and House tax bills jack up that deficit, federal spending cuts could begin as early as next year. (Social Security is exempt from Paygo.) Estimates vary, but there’s no question we’re talking billions in Medicare cuts, perhaps tens of billions. Both Ryan and McConnell vowed last week to prevent these cuts, saying there are legislative gimmicks (my word, not theirs) they can deploy if necessary. But again, Republicans like Ryan have made no secret of their long-term desire to trim entitlements.
The window for these Scrooges to act is now. A solid economy—and that’s what we have today—is the perfect distraction; people have jobs, wages are rising, consumer confidence is high. It’s easier to ask voters to give something up when they’re doing well—and that’s if they’re even paying attention. Such cuts could be packaged and sold as common-sense reform to preserve these important programs for the long term. This isn’t unreasonable, by the way, given that entitlement spending is galloping along at growth rates that exceed that of the economy itself. Such a pace is unsustainable.
But 2018 is also a big election year. Trump is weak in the polls; recent Democratic sweeps in Virginia and New Jersey give them hope that they can deal Republicans a setback. Some analysts even think the Democrats can retake the House itself, ending Ryan’s dreams. Entitlement cuts will unquestionably be an issue—Democrats will make sure of this.
If Republicans want to move on Social Security, Medicare (and Medicaid), they’ve got a year to do so; after that, all bets are off.