Older Americans tend to vote, and they also tend to be wary of politicians who propose entitlement reform. That combination typically leads to inertia among elected officials whose objective is self-preservation.
President Joe Biden has been happily exploiting this dynamic of late, claiming that Republican plans intended to shore up Social Security and Medicare actually represent a threat to the existence of these popular programs. Yet astute seniors will note that Biden’s recent budget blueprint takes a pass on offering any serious proposals to address the long-term solvency of the nation’s entitlements.
This shows an astonishing lack of leadership. Consider that the Social Security Trust Fund’s cash reserves are set to run out in 2035. If nothing is done between now and then, expect Congress to authorize billions in transfers from the general fund in order to avoid benefit cuts. That might be politically beneficial, but it will only hasten the nation’s rush toward the looming fiscal cliff. Yet the president’s budget is mute on Social Security.
To make matters worse, the Biden spending plan includes a cornucopia of tax increases on the “rich,” including a new constitutionally dubious wealth tax. These taxes — along with the administration’s push to enlarge the federal regulatory behemoth — will only further hinder economic growth.
“My own research on the Biden agenda’s effect on Social Security and Medicare,” Casey B. Mulligan, a University of Chicago economics professor, wrote this week for the Wall Street Journal, “makes clear that low economic growth translates into smaller benefits for seniors.” Mulligan estimates that “degrowth policies since 2020 will cumulatively reduce Medicare and Social Security tax revenue by at least $400 billion — and perhaps as much as $900 billion. The tax base will shrink even more if Biden succeeds in levying higher wealth and businesses taxes.”
Indeed, the Center for a Responsible Federal Budget recommends that “a thoughtful Social Security reform plan should go beyond simply assuring actuarial soundness by also improving retirement security and economic growth. In particular, Social Security reform should increase national income by promoting work, investment and fiscal sustainability.”
The Biden budget does the opposite. Biden and progressive Democrats promote a safety hammock, creating disincentives to work. White House tax policy will hinder investment. The administration’s unprecedented fiscal blowout can hardly be described as sustainable when the national debt races past $31 trillion and the president prescribes more of the same.
Biden’s budget makes clear he’s wedded to a fiscal agenda that will only exacerbate the financial obstacles confronting Social Security and Medicare.
