House GOP plan would cut Medicare, Social Security to balance budget

The budget would transform Medicaid, the federal-state health-care program for the poor, by limiting per-capita payments or allowing states to turn it into a block-grant program
By Erica Werner | The Associated Press
June 20, 2018 at 8:34 am
House Republicans released a budget proposal Tuesday that would balance in nine years – but only by making large cuts to entitlement programs, including Medicare and Social Security, that President Donald Trump has vowed not to touch.

The House Budget Committee is aiming to pass the blueprint later this week, but that may be as far as it goes this midterm election year. It’s not clear that GOP leaders will put the document on the House floor for a vote, and even if it were to pass the House, the budget would have little impact on actual spending levels.

Nonetheless the budget serves as an expression of Republicans’ priorities at a time of rapidly rising deficits and debt. Although the nation’s growing indebtedness has been exacerbated by the GOP’s own policy decisions – including the new tax law, which most analyses say will add at least $1 trillion to the debt – Republicans on the Budget Committee said they felt a responsibility to put the nation on a sounder fiscal trajectory.

“The time is now for our Congress to step up and confront the biggest challenge to our society,” said House Budget Chairman Rep. Steve Womack (R-Ark.). “There is not a bigger enemy on the domestic side than the debt and deficits.”

The Republican budget confronts this enemy by taking a whack at entitlement spending. Lawmakers of both parties agree that so-called mandatory spending that is not subject to Congress’s annual appropriations process is becoming unsustainable. But Trump has largely taken it off the table by refusing to touch Medicare or Social Security, and Democrats have little interest in addressing it except as part of a larger deal including tax hikes – the sort of “Grand Bargain” that eluded former President Barack Obama.

The House Republican budget, entitled “A Brighter American Future,” would remake Medicare by giving seniors the option of enrolling in private plans that compete with traditional Medicare, a system of competition designed to keep costs down but dismissed by critics as an effort to privatize the program. Along with other changes, the budget proposes to squeeze $537 billion out of Medicare over the next decade.

The budget would transform Medicaid, the federal-state health-care program for the poor, by limiting per-capita payments or allowing states to turn it into a block-grant program – the same approach House Republicans took in their legislation that passed last year to repeal the Affordable Care Act (the repeal effort died in the Senate). Changes to Medicaid and other health programs would account for $1.5 trillion in savings.

Social Security comes in for more modest cuts of $4 billion over the decade, which the budget projects could be reached by eliminating concurrent receipt of unemployment benefits and Social Security disability insurance.  Democrats were quick to criticize the GOP proposal.

“The 2019 Republican budget scraps any sense of responsibility to the American people and any obligation to being honest,” said Rep. John Yarmuth of Kentucky, the top Budget Committee Democrat. “Its repeal of the Affordable Care Act and extreme cuts to health care, retirement security, anti-poverty programs, education, infrastructure, and other critical investments are real and will inflict serious harm on American families.”

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Social Security Expected to Dip Into Its Reserves This Year

Aging population is boosting the costs of Social Security and Medicare as growth projections ease

Social Security program’s cost will exceed its income this year.
Social Security program’s cost will exceed its income this year. Photo: mario anzuoni/Reuters

This is three years sooner than expected a year ago, partly due to lower economic growth projections, according to the latest annual report the trustees of Social Security and Medicare released Tuesday. The program’s income comes from tax revenue and interest from its trust fund.

The trust fund will be depleted in 2034 and Social Security will no longer be able to pay its full scheduled benefits unless Congress takes action to shore up the program’s finances. Without any changes, recipients then would receive only about three-quarters of their scheduled benefits from incoming tax revenues.

The report also said that Medicare’s hospital insurance fund would be depleted in 2026, three years earlier than anticipated in last year’s report. Absent changes, the program then would be able to handle 91% of costs.

The nation’s aging population is boosting the costs of Social Security and Medicare, while revenue gains lag due to slower growth in the economy and the labor force.

About 61.5 million people receive retirement or disability benefits from Social Security and 58.4 million receive Medicare.

Cost SurgeSocial Security costs are expected to exceed income this year for the first time since 1982.Source: Social Security trusteesNote: Social Security income consists of tax revenue and interest on trust fund securities.
Total incomeTotal costs1970’80’902000’10’20’30020040060080010001200140016001800

The Social Security program works by using payroll taxes paid by workers and employers to pay for retirees’ benefits. What is left over is invested in the trust fund. Interest earned is reinvested in the fund.

Over time, the trust fund has grown to nearly $3 trillion. But long-running demographic trends threaten its finances. Last year, there were 2.8 workers for every Social Security recipient, down from 3.3 in 2007.

Treasury Secretary Steven Mnuchin said in a statement the Trump administration’s efforts to cut taxes, reduce regulatory burdens and overhaul trade agreements would boost economic growth and generate new money for the country’s two largest entitlement programs.

Social Security consists of two programs, one for retirees and one for people who claim disability benefits.

The retirement program’s reserves are projected to be depleted in 2034, a year sooner than projected in last year’s report.

The disability fund is expected to run out in 2032, as opposed to 2028 as forecast in last year’s report. The program’s financial health has improved in recent years as the growth in disability applications has fallen, the report said.

The tax cuts signed into law last year have slightly lowered Medicare and Social Security’s projected revenue over the next few years. Lower income-tax rates reduced projected revenue from the taxation of Social Security benefits. That means less money flowing into both programs because those revenues are transferred to the trust funds.  President Donald Trump’s decision to end a program offering young undocumented immigrants reprieve from deportation while allowing them to work also reduced anticipated tax revenue into the Social Security program, the report said.

Congress has debated ways of bolstering the programs’ finances, but hasn’t agreed on what to do.

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Trump Tells Fellow Republicans He’ll Gut Social Security ‘On The First Day Of His Second Term’

Written by Nicole James (5 days ago)
One of President Trump’s hallmark campaign promises was that he would never cut Medicaid, Medicare, or Social Security. So, of course, he’s planning on cutting Social Security.

An unnamed congressman met with several reporters on Capitol Hill to discuss Trump’s long-term plans. Trump “told a Republican member of Congress that he was willing to go after Social Security and other entitlement programs at the beginning of his second term.”

He purposely said this away from the public, knowing that it would be a very unpopular decision.

“When Donald Trump launched his campaign, he pledged to the American people that he would not cut Medicare or Social Security,” Andrew Bates, deputy communications director for American Bridge, said in a statement to Shareblue Media. “Now, less than one year into his administration, we’re learning that as Trump tries to pass tax cuts for the wealthy that sell-out the middle class, he’s also having private conversations with members of Congress about breaking both of those major promises to the country.”

What’s even more frightening is that Trump is aware of how bad this would go over with his base and the country, and he’s waiting for his second term, when he no longer has to worry about re-election. If what we’re seeing right now are the choices he makes when he’s confident that he’ll serve a second term, what horrible plans does he have if he does win in 2020?
Hopefully, we will never know.

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McHenry: End Social Security and Medicare

Posted by Thomas Mills | Sep 20, 2017 | Editor’s Blog | 40 |

Republican Congressman Patrick McHenry said out loud what most Republican only say in private. He wants to end Social Security and Medicare. He told Charlotte Observer political reporter Jim Morrill, “I would rather have complete control of the social safety net given to the states.” That would end Social Security and Medicare. Most Republicans would probably agree. And that’s the difference between Democrats and Republicans.

Shifting the burden of caring for our retirees to the states would likely result in millions of more Americans dying in poverty. And the populations most affected would almost certainly be minorities and people with physical and mental disabilities. Social Security and Medicare work because the pool of people supporting them is so large. Placing the burden on states would result in unnecessary pain.

As we’ve seen in North Carolina and other Southern states, discrimination is alive and well. Democracy is not. Here, Republicans carefully and methodically targeted African-Americans in a successful effort to keep them out of power. You can only imagine what they would do if hundreds of millions of dollars to provide a social safety net were at stake.

Before Republicans took power in North Carolina, Democrats warned that they would cut funding to our public schools, colleges and universities. Republicans vehemently denied it and claimed Democrats were using cheap scare tactics. But once they had control, North Carolina’s per pupil spending dropped to among the lowest in the nation. Even today, the Republican-controlled UNC Board of Governors is demanding cuts to schools across the system. And that comes on the heels of huge cuts from the General Assembly over the past six years.

Similarly, Republicans routinely deny they want to cut Social Security benefits or Medicare. They call Democrats’ warning “Mediscare” but giving control of the safety net to the states would leave millions of people with fewer or no benefits. The GOP wants to reverse the programs of the New Deal and Great Society. They would take us back to a time when life expectancy for people who reached adulthood was about 65 years old and Jim Crow dominated the South. The people who would benefit have reaped the greatest rewards by living in the United States. The people who need support would suffer the most.

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