Biden and Trump Try To Wish Away the Looming Entitlement Crisis

“Contrary to what Trump and Biden imply, it is impossible to “protect” Social Security and Medicare by doing nothing. Inaction will guarantee automatic benefit cuts in less than a decade.
In 2033, according to the latest projections, Social Security’s trust fund “will become depleted,” and “continuing program income will be sufficient to pay 77 percent of scheduled benefits.” Two years before then, Medicare’s hospital insurance trust fund “will be sufficient to pay 89 percent of total scheduled benefits.””

Biden Says He’ll Make the Wealthy Pay More To Fix Social Security. Here’s Why That Won’t Work.

“Under current law, the payroll tax that funds Social Security is capped so that, for this year, only the first $168,600 in earnings are subject to it.
Raising that cap—or eliminating it—is frequently discussed as one possible solution to Social Security’s approaching insolvency. That seems to be the idea that Biden was gesturing towards in his speech.

On its face, this isn’t necessarily the worst idea. The cap is completely arbitrary, so there’s no principled reason why all earnings shouldn’t be treated equally. And there’s no doubt that raising the cap would generate more revenue to help keep Social Security afloat. The Congressional Budget Office estimates that applying payroll taxes to higher income levels could raise $1 trillion in revenues over a 10-year period (though the amount of revenue would depend on how the cap was altered, and whether benefits increased as well).”

“raising or eliminating the payroll tax gap doesn’t come close to solving the long-term Social Security shortfall. It might generate $1 trillion over 10 years, which is a lot of money, but it doesn’t come close to the $2.8 trillion deficit the program is expected to run over the next decade.

“Eliminating the tax cap would either raise benefits as well (reducing the proposals’ savings), or—if the accompanying benefits are canceled—turn Social Security into a true welfare program by delinking contributions and benefits,” writes Brian Riedl, a senior fellow at the Manhattan Institute and former Senate budget staffer, in a recent piece debunking some common myths about Social Security reform. “Moreover, eliminating the cap would not bring permanent solvency or avert the need for benefit changes….The system would return to deficits by 2029. Lawmakers would still need to reform benefit levels and the eligibility age.””

Trump just opened the door to Social Security cuts. Take him seriously.

“During his 2016 campaign, Donald Trump called for a ban on all Muslim immigration to the United States, the targeted assassination of terrorists’ family members, the overturning of Roe v. Wade, the repeal of the Affordable Care Act, and enormous corporate tax cuts.
And voters considered him the most “moderate” Republican candidate in more than four decades.

To the extent this perception had any basis in reality, it reflected Trump’s genuine moderation on one highly salient issue: Unlike many of his GOP predecessors, the mogul emphatically opposed any cuts to Medicare and Social Security. This likely made it a bit easier for ideologically conflicted older Rust Belt voters to pull the lever for a Republican.

As president, Trump never pursued large cuts to Medicare or Social Security benefits and implored his party to avoid them during the debt ceiling fight last year.

Since the days of FDR, Democrats have profited from their reputation as the more stalwart guardians of entitlement benefits. Trump’s triangulation threatens to nullify that critical source of partisan advantage. President Joe Biden has therefore sought to portray Trump’s avowed support for Social Security and Medicare as fraudulent. And on Monday, the presumptive GOP nominee bolstered the president’s case.

In an interview with CNBC, Trump said that he was open to cutting entitlement spending. Then, his campaign said that he wasn’t.

Trump’s reflections on public policy tend to bear only a loose resemblance to coherent thoughts. And his remarks about entitlements on CNBC Monday were no exception. In that exchange, anchor Joe Kernen told Trump that “something has to be done” about entitlement costs, then asked if the former president had changed his mind about cutting “Social Security, Medicare, [and] Medicaid” in light of the rising national debt.

Trump replied:

So first of all, there is a lot you can do in terms of entitlements, in terms of cutting, and in terms of, also, the theft and the bad management of entitlements — tremendous bad management of entitlements. There’s tremendous amounts of things and numbers of things you can do. So I don’t necessarily agree with the statement.

Biden pounced on Trump’s words, posting a clip of the Republican’s answer and vowing that no cuts to entitlements would be allowed “on my watch.” The Trump campaign replied, “If you losers didn’t cut his answer short, you would know President Trump was talking about cutting waste.”

This rebuttal is disingenuous. Trump plainly stated that there was a lot that the government could do “in terms of cutting” entitlements and “also” in terms of combating “theft and bad management of entitlements.” What precisely the former president is referring to when he alleges that Social Security, Medicare, and Medicaid are rife with theft, bad management, and waste is unclear. And neither he nor his campaign has produced any actual evidence of such improprieties.

This said, it’s also true that, by the end of his answer, Trump was evincing disagreement with Kernen’s statement that entitlements needed to be cut. So, one could reasonably argue that, as with so many of Trump’s statements, his musings on entitlement reform were too suffused with internal contradictions and baseless demagogy to have any concrete meaning.

Yet Trump’s gaffe is not the only reason for voters to fear that a Republican victory in November could lead to leaner Social Security benefits.

For one thing, Trump spent his entire presidency trying to cut Medicaid, an entitlement program that provides not only health insurance for low-income Americans, but also long-term care for older voters. And he has tried to cut Social Security benefits for disabled and low-income people.

For another, the GOP’s avowed fiscal commitments cannot be reconciled with preserving Medicare and Social Security in their present forms. Congressional Republicans are committed to enacting trillions of dollars worth of new tax cuts, perennially increasing defense spending, and balancing the federal budget. There is no politically tenable way to do this without cutting Social Security or Medicare.”

20 Percent of Welfare Spending Goes to the Households Taxed To Fund It

“About one in every five dollars that passes through the federal welfare system ends up right back where it started, according to a new report.
It’s not robbing Peter to pay Paul. It’s more like “robbing Peter to pay Peter,” wrote the report’s author, Judge Glock, director of research at the Manhattan Institute.

As the federal welfare state has grown to a point where many middle-class and even some upper-income households receive benefits, it has become more common for the same households to both pay federal taxes and collect federal transfer payments. Glock’s paper shows how significant that overlap is: About 20 percent of the annual funds in the federal welfare system are simply returned to households that paid that amount in federal taxes.”

“Dollars returned in the form of welfare transfers are often restricted—food stamps can only be used for certain purchases, for example—in ways that dollars never taxed away from someone’s paycheck aren’t. Or the funds might only be available at certain times of the year, as is the case with welfare delivered via refundable tax credits. There’s also the cost of cycling that money through the system: paying for the IRS to collect it and various bureaucrats in other places to oversee its return.”

The US House passes the bipartisan tax deal to expand the child tax credit. Up next: the Senate.

“Republicans are hoping to renew three business world deductions from the 2017 Trump tax cuts that have begun to phase out in recent years. Those provisions would allow companies to deduct more for things like research and development, equipment investments, and interest costs.
For the Democrats, the child tax credit would receive a new expansion that would allow poorer families greater access to the credit. One report from the progressive Center on Budget and Policy Priorities estimated that 16 million children in lower-income households would benefit from the enhancement with a half a million of them lifted above the poverty line.

The deal includes a range of other provisions around issues like double taxation for companies that operate in Taiwan, additional assistance for disaster-struck communities; the costs of the bill would be paid for by implementing changes to a pandemic-era employee retention tax credit.

This bill — if enacted — would serve as a stopgap of sorts ahead of a tax debate in 2025, which will center around an array of provisions in the 2017 Trump tax cuts that are set to expire on Dec. 31, 2025.”

Georgia offered Medicaid with a work requirement. Few have signed up.

“A GOP experiment forcing low-income people to work to qualify for public health insurance benefits is stumbling in Georgia.

The state’s Republican governor, Brian Kemp, expected 31,000 Georgians to sign up in the first year of the program, which started in July. Through four months, only 1,800 people enrolled — and critics blame the paltry expansion on an overly complex program with too many hurdles for people to clear.”

Canada is promoting child care for $10 a day

“A massive social policy experiment is unfolding in Canada to provide families throughout the country with child care for an average of $10 a day. The plan, which was introduced in 2021 amid the turmoil of the pandemic, aims to spend up to $30 billion Canadian by 2026 to bring down child care costs for parents and to create 250,000 new slots.
The federally backed effort brings Canada’s safety net closer to that of other Western democracies that have stepped up on child care, including Finland, Sweden, France, Germany, and Australia, and it could prove an inspiration to other countries whose systems still lag, like the United States.

Almost three years in, Canadian families are already seeing a significant drop in price, paying hundreds of dollars less for care each month than they were prior to 2021. Canada is making “solid progress in offering more affordable child care,” concluded a think tank report issued in October. Five of Canada’s 13 provinces and territories have already reached the $10-a-day child care goal ahead of schedule, while others have reduced their fees by over 50 percent. ($10 in Canadian currency is roughly $7.50 in US.)

In addition to reducing costs for parents, the plan has created about 52,000 new child care spots”