Editor’s Note: Lanhee J. Chen, Ph.D. is a regular contributor to CNN Opinion and the David and Diane Steffy Fellow in American Public Policy Studies at the Hoover Institution. He was a candidate for California State Controller in 2022. He’s played senior roles in both Republican and Democratic presidential administrations and been an adviser to four presidential campaigns, including as policy director of Romney-Ryan 2012. The views expressed in this commentary are his own. View more opinion on CNN.
House Speaker Kevin McCarthy and Republicans in Congress want to restore fiscal restraint to Washington, but it won’t be easy. The difficult work of returning yearly deficits and the long-term debt to a sustainable path is complicated by the rise in interest rates and their impact on the budget, with spending on interest alone set to quadruple over the next 30 years.
Disproportionate media and political attention is often paid to discretionary spending in the budget, such as expenditures on defense, some social programs or the wall at the southern border.
But these policy priorities have relatively less impact on our country’s long-run fiscal position than spending on major entitlement programs, particularly Medicare and Social Security. To truly return fiscal restraint to federal spending and make both programs sustainable, McCarthy and the Republicans in Congress will have to get serious about reforming them.
And therein lies the challenge. The politics of entitlement reform and fiscal policy more broadly have gotten noticeably more complex (and confused) within the Republican Party since former President Donald Trump’s election in 2016.
Trump was averse to touching entitlement spending and inspired a group of populist-minded Republicans to argue against reforms to Medicare and Social Security. All of this, of course, while Trump signed into law policies that added almost $8 trillion to deficits and saw debt held by the public exceed the size of the US economy for the first time since World War II.
For their part, Democrats have largely opposed entitlement reforms over the years and effectively politicized the issue, arguing that many GOP-backed entitlement reforms would throw grandma (and grandpa) off the proverbial cliff. President Joe Biden clearly drew the battle lines when he highlighted a vow to “protect” Medicare and Social Security in a January 7 statement congratulating McCarthy on his election as Speaker.
But a few House Republicans, including several conservatives who initially opposed a McCarthy speakership, have explicitly supported a 2023 budget that directly addresses spending on Medicare, Social Security and other entitlement programs. For his part, McCarthy addressed the issue of entitlement reform in a Thursday press conference by noting that House Republicans would also “protect Medicare and Social Security” but were prepared to “scrutinize every single dollar spent.”
On this issue, McCarthy faces an early conflict in his term between politics and policy. There are unquestionable political risks to addressing popular programs like Medicare and Social Security, particularly when potential reforms or policy changes can be demagogued or characterized in an unflattering light by opponents.
Former House Speaker Paul Ryan, a champion of entitlement reforms during his time in Congress, was relentlessly attacked for proposing even modest adjustments to the Social Security retirement age and efforts to create more choice and competition in Medicare, amongst other changes.
Moreover, proposed changes to Medicare and Social Security threaten to erode Republican support amongst working-class voters, a key constituency whose votes will help McCarthy keep the speakership, as well as recapture the Senate majority and the White House in 2024.
Politics aside, the demographic and economic realities driving the need for entitlement reform are stark. As America ages and more people rely on both Medicare and Social Security in the coming years, both programs will only increase their financial strain on federal budgets. Entitlement (or, in the language of budget wonks, “mandatory”) spending is responsible for over 60% of average yearly outlays over at least the next 10 years. Projected average annual spending on Social Security alone will outpace all federal discretionary spending starting in 2033.
In the absence of reform, moreover, both programs face major challenges. Social Security will exhaust its retirement trust fund reserves in 10 years – a shortfall that, if unaddressed, would result in an immediate and draconian across-the-board cut in benefits. Medicare’s hospital insurance trust fund, which pays inpatient health benefits, will have its reserves exhausted within the next five years, triggering provider payment cuts that could jeopardize seniors’ access to care.
The case for reform – and reform now – is clear, as the fiscal challenges in Medicare and Social Security only get more difficult to solve with the passage of time.
Since 2016, the GOP has faced an identity crisis. The party of spending restraint and balanced budgets has been complicit in ballooning budgets and kicked the can down the road on entitlement reform in the name of political expediency.
While nothing that the House majority proposes to change Medicare or Social Security will likely become law, with Democrats in charge of the Senate and Biden as president, McCarthy and his colleagues do have a unique opportunity: They can show Americans that Republicans do have an identity rooted in fiscal responsibility, all while convincing them that reform is not only needed, but good.
