Debt Ceiling Standoff Asks: Will Social Security Be There for You?
...or Medicare, or Medicaid? But we look at one for the moment.
The 20-or-so of the hard-right faction in the House of Representatives refuse to raise the debt ceiling without significant cutbacks to Social Security, Medicare, and Medicaid. The White House refuses to negotiate. They are "fiscally demented", said President Biden in a Martin Luther King Day speech. "They don’t quite get it".
Treasury Secretary Janet Yellin says we just bumped up against the ceiling. Her department is looking for what she called "extraordinary measures" to enable the country to keep paying its bills for a few more months.
The squad in the House holding Speaker Kevin McCarthy hostage to its demands needs no individual profiling. They are of a piece. All but three were endorsed by Donald Trump, and 14 of the 15 who were members of Congress on Jan. 6 were among the 139 representatives in the House who voted not to certify states' electors in order to keep Trump in power. (And 118 of the 139 election deniers were re-elected). Added to their willingness to cause a government shutdown and a United States default on paying its debts is reportedly a three-page list of other demands McCarthy has acceded to that is apparently too self- incriminating for him to release.
As for Mr. Biden's accusation of fiscal dementia, in his first two years his administration has run up $4.15 trillion in deficits, $1.9 trillion of which was the American Rescue Plan enacted right after he took office. A continuance of pandemic stimulus just as the economy was rebounding, it is widely considered to have been excessive and contributing to the first serious inflation in 40 years.
The debt ceiling, the amount the government is permitted to borrow to pay its already incurred obligations, has routinely been raised in the past without fuss – three times by many of these same Republicans during the Trump administration – and a few moderate Republicans will probably join all the Democrats to save the day just before the nation teeters over the brink, putting an end once again to the Kabuki performance. A government shutdown in the cause of reducing social program benefits that the public likes will not be a winner at the polls in 2024.
While difficult to give House Republicans any credit – their very first act in the 118th Congress was the hypocrisy of voting to cancel the $80 billion the IRS is to receive to help the agency increase tax receipts to reduce the deficit! – but the gang of 20 at least has raised the question of unsustainable entitlements that Congress will not face. Not sustainable brings to mind Herb Stein's common sense maxim — he was chairman of the Council of Economic Advisers under Nixon and Ford — "If something cannot go on forever, it will stop."
SO LET'S TAKE A LOOK AT SOCIAL SECURITY.
For many decades, the Social Security Administration (SSA) took in more from payroll taxes than it paid out as benefits to seniors and those with disabilities. The difference was loaned to the government in exchange for an IOU referred to as a trust fund. As the bulge of the post-World War II baby boomer generation began to retire, that finally reversed. Beginning in 2018, benefit outlays began to exceed tax receipts and the SSA had to begin drawing down the difference from the government trust fund to cover the shortfall. It is estimated that by 2035 the trust fund will have been drained, leaving only the income of payroll taxes. Benefits will have to be slashed by 21%, possibly more. Unless Congress acts, but that's the problem.
The dozen years will go by quickly. Where will that leave you?…