WASHINGTON- In response to the Congressional Budget Office’s latest report and President Joe Biden accusing some Republicans of wanting to cut Social Security and Medicare benefits, talk of entitlement program reform has swept across the halls of Congress in recent weeks, prompting a group of lawmakers to suggest solutions to deal with a decades-old crisis.
The Congressional Budget Office’s economic outlook report estimates that spending for Social Security and Medicare, federal entitlement programs for health care and retirement for Americans over 65, will outpace federal tax revenue growth over the next decade due to an aging population and increasing health care costs. Social Security’s main trust fund is projected to experience a funding deficit in 2032, and estimates suggest that Medicare’s hospital trust fund will be exhausted by 2028.
These numbers, as well as the looming debt ceiling debt, have upped the stakes for action to avoid program insolvency.
Despite Senate minority leader Mitch McConnell’s repeated vows to leave Social Security and Medicare untouched, some lawmakers are making a call for action.
According to a statement from their spokespeople, Senator Angus King (I-ME) and Senator Bill Cassidy (R-La.) are working together on legislation to address the sustainability of Social Security. Semafor reported that this plan may include the establishment of a sovereign wealth fund for programs to increase funding.
“The Social Security trust fund is going insolvent in 11 years,” their offices said in a statement to Medill News Service. “Senators Cassidy and King have been working on a legislative solution to give Americans a choice other than the automatic benefit cuts that will be triggered if we do nothing.”
Entitlement program financing reform has long been a point of debate in Washington, dating back to the Greenspan Commission and the passage of the 1983 Social Security Amendments, which added measures to secure financing of the Social Security system.
In 2001, Olivia S. Mitchell, a professor at the University of Pennsylvania’s Wharton School of Business, served on the Commission to Strengthen Social Security. She hopes the recent CBO report will spur lawmakers to take action to address forthcoming insolvency.
“This should serve as a loud wakeup call to policymakers, who no longer have the luxury of ignoring the fact that benefits will have to be cut by around a quarter, for current and future retirees,” Mitchell said in an email statement to Medill News Service.
Cassidy said he believes that steps must be taken to preserve entitlement programs and criticized Biden for not addressing this issue.
“It is a choice to do nothing,” Cassidy said. “And if, if the president chooses to do nothing, (Social Security) benefits might be cut by 24% within about 10 years.”
Cassidy emphasized the importance of preserving benefits and guaranteeing program sustainability in his reported plan with King. When asked about the plan, King said that it would be released in the “reasonably near future,” but declined to offer specifics.
Other Republican lawmakers have expressed interest in this reform. Senator Mike Rounds (R-S.D.) expressed the need for a bipartisan plan, saying “there’s a group of us that have been working on it now for at least six months.”
Senator Mitt Romney (R-Utah) told reporters this week that he is in support of the group’s efforts, calling the plan a “creative way of solving the shortfall in Social Security,” without raising taxes or reducing benefits.
King and Cassidy’s expected plan is one of a series of solutions proposed by lawmakers in recent years to address insolvency concerns .
Along with Romney and Senator Sinema (I-Ariz.), Senator Joe Manchin (D-W.Va.) introduced the TRUST Act in 2019 to establish a panel to review Social Security and Medicare programs.
Other solutions proposed by Republicans have included raising the payroll tax cap or increasing the retirement age. The Republican Study Committee proposed raising the Medicare eligibility age to 67 in its Blueprint to Save America last year. Some Democrats such as Senator Bernie Sanders (D-VT) have suggested waging new taxes to extend program solvency.
David Kendall, a Senior Fellow for Health and Fiscal Policy at Third Way, a center-left Washington D.C. think tank, says that the current discussion around reform has to be focused on preserving Social Security and Medicare rather than “putting them on the chopping block.” The idea of cutting entitlement program benefits is largely unpopular with the American public.
Mitchell acknowledged that the politically sensitive nature of these programs means that lawmakers may not be inclined to take up these reforms.
“It is possible and even likely that our elected officials will do nothing until the system is out of money,” Mitchell said in an email. “That would be a huge disappointment to all of us, and it will be a crisis for people who depend on the system for retirement security.”
Despite these challenges, some lawmakers are pushing forth in a divided Congress to address a looming crisis within entitlement program financing.
“We have to do something about this. We have to think about how do we ensure the longevity of the system and the health of the system,” Sinema said during a Washington Post Live event. “And right now, the two programs are not healthy.”