All Washington seems to be buzzing this week over a single question: Is Sen. Mitch McConnell (R-Ky.) deliberately trying to throw the election to the Democrats?
At the root of the debate are interviews the Senate majority leader gave to Bloomberg and Reuters on Tuesday and Wednesday. McConnell identified “entitlements” — that’s Washington code for Social Security, Medicare and Medicaid — as “the real drivers of the debt” and called for them to be adjusted “to the demographics of the future.”
Translation: He wants to cut benefits.
McConnell’s position on the social insurance programs fits in with Republican policy on the Affordable Care Act; as it happens, the majority leader also telegraphed a plan to try again to repeal the ACA after the midterm elections. That’s despite indications that the ACA is becoming more popular with the public, not less, and voters’ concerns about preserving its protections for those with preexisting conditions may be driving them to the polls — and not to vote Republican.
McConnell told Reuters that the GOP’s failure to repeal the ACA was “the one disappointment of this Congress from a Republican point of view.” He said if the Republicans have the votes after the election, they would try again. He also defended the lawsuit brought in federal court by Texas and other red states and supported by the Trump administration that would invalidate the ACA’s protections for patients with preexisting conditions.
“Nothing wrong with going to court,” he said. After the Trump administration withdrew from defending the law against the lawsuit, a coalition of blue-state attorneys general stepped in to handle the defense. The case is pending.
The novel element about GOP declarations of hostility to social insurance programs this time around is that they persist in blaming the deficit on the programs, which are mainstays for middle- and low-income Americans despite their having just passed a budget-blasting tax cut for corporations and the wealthy that is estimated to cost some $2 trillion over the next 10 years.
That’s not pure conjecture. The U.S. Treasury calculated the federal deficit in the 2017-18 fiscal year ended Sept. 30 at $779 billion, close to the Congressional Budget Office calculation of $793 billion. That’s the largest federal deficit since 2012, when the government was still spending to assist recovery from the 2008 recession.
The CBO projects the current fiscal year deficit at $973 billion, and says it expects annual deficits to exceed $1 trillion into the next decade. The CBO attributed much of the deficit to “recently enacted legislative changes. … In particular, provisions of the 2017 tax act.”
The act “temporarily reduced individual income tax rates, nearly doubled the standard deduction, modified or eliminated certain deductions or exemptions, and temporarily allowed firms to deduct the cost of capital investments immediately,” as the CBO said. It projected government revenues through 2027 to fall nearly $1.1 trillion below its previous, pre-tax-cut estimate, and the federal deficit to be higher by $2.24 trillion over that time span.
Thanks to higher federal debt and higher interest rates, the CBO estimated that net interest costs would be about equal to outlays for Social Security by 2028. To put it another way, much of the borrowing necessitated by the tax cut would approach all the benefit payments for Social Security beneficiaries.
The CBO also projects that combined outlays for Social Security and the healthcare programs (Medicare, Medicaid, the Children’s Health Insurance Program and Affordable Care Act subsidies) would rise to 12.8% of gross domestic product in 2028 from 10.1% today. Spending on interest would nearly double to 3.1% of GDP.
Keeping in mind that much of the spending on Social Security and Medicare is covered by payroll taxes or premiums, it’s clear that the real driver of the deficit is Republican fiscal policy and its relentless payouts to the wealthy.
What’s especially curious about the policy discussion this week is that some reporting still treats it as a they-said-they-said debate between Republicans and Democrats, as if the argument is over partisan interpretation, not party policy. The Washington Post, for instance, headlined its article on McConnell’s statements thus: “As midterms near, Democrats accuse GOP of plotting to cut Medicare, Social Security.” Is there any doubt about this “plot”?