Social Security and Medicare are two of the government’s mandatory spending programs — and popular ones at that — but one senator has suggested changing that label, making them vulnerable to annual budget cuts every year.
Under the current structure, Social Security and Medicare budgets are automatically approved and paid out, but under Wisconsin Republican Sen. Ron Johnson’s plan, Congress would have the chance to review and edit these programs’ budgets every year.
“If you qualify for the entitlement, you just get it no matter what the cost,” Johnson said during an interview on “The Regular Joe Show.” “What we ought to be doing is we ought to turn everything into discretionary spending so it’s all evaluated so that we can fix problems or fix programs that are broken, that are going to be going bankrupt.”
“As long as things are on automatic pilot, we just continue to pile up debt,” he added.
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Other examples of discretionary spending programs include Pell grants for college students and veterans’ benefits. Tension over the budget — and if money would be allocated from mandatory versus discretionary spending — arose in the Senate last month when a bill about healthcare benefits for veterans who suffered from burn pits overseas was stalled.
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Social Security is celebrating its 87th anniversary this month, at a time when many Democratic legislators are pushing to improve it—or just keep it solvent. The two trust funds that support the program’s retirement, survivor and disability benefits are expected to run out of money by 2035, at which point beneficiaries would only receive about 80% of what they’re owed. For many Americans, such a cut would be devastating, as many retirees rely on the program for some, if not most, of their retirement income.
Medicare Part A has until 2028 before a 10% benefit cut may occur. Congress has never let these programs falter, but little progress has been made to deter the looming insolvency as of yet.
Johnson did not respond to MarketWatch’s request for comment by deadline. His spokeswoman Alexa Henning told Bloomberg in an emailed statement the senator’s statement was about Congress taking its responsibilities to seniors and the programs they rely on seriously. “The senator’s point was that without fiscal discipline and oversight typically found with discretionary spending, Congress has allowed the guaranteed benefits for programs like Social Security and Medicare to be threatened.”
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But critics say Johnson’s proposal could be detrimental to Social Security and Medicare, giving politicians an opportunity to cut spending for beneficiaries.
“It’s another way of saying let’s end the program as you know it,” said Nancy Altman, president of Social Security Works, which advocates for expanding the program. Workers contribute to the program throughout their careers and expect to receive a benefit when they retire, she said, switching the program from a mandatory spending budget line to a discretionary one would leave those benefits “to the whims of Congress.”
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The change would be futile, as politicians would be hard-pressed to deny beneficiaries their benefits, said economist Andrew Biggs, who this year President Biden nominated as Republican candidate for the Social Security Advisory Board, a bipartisan independent agency.
“What are the chances that next year, Social Security says here’s what we need to pay full benefits and Congress would say no?” Biggs said. “If Congress decides they want to reduce [benefits], they have to put out a proposal to do this. Changing budget rules isn’t going to do it for them.”
Democrats also have other ideas to bolster the program, however. Rep. John Larson from Connecticut has been pushing his proposal, the Social Security 2100 Act, for years. The bill, if passed, would increase the minimum benefit for low-income retirees, switch the program to the Consumer Price Index for elderly consumers (so that benefits’ cost-of-living adjustments are more closely aligned with how older Americans spend on goods and services) and create caregiver credits for people who leave the workforce to care for their loved ones. Larson said increasing the payroll tax cap on high-income workers, which is currently $147,000 for 2022, would fund these expansions.
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