Republicans are divided over how aggressively to address the deficit, including reforms to Medicare and Social Security, if they regain control of Washington next year, when the federal debt is expected to reach $36 billion.
Former President Trump calls for tax cuts of $4 billion to $6 billion over 10 years if elected for another term and the Congressional Budget Office predicts that even without further tax cuts the debt will grow by more than 20 billions of dollars over the next decade.
The dire budget outlook is putting pressure on Republicans to come up with plans to control the federal deficit, something they have made a major political issue by blaming federal spending during the Biden administration for fueling inflation.
However, GOP lawmakers are deeply divided over how to reduce the deficit, and some fiscal conservatives blame their own leaders for rising debt during Trump’s first term in the White House.
A big question Republicans would immediately face if Trump wins big on election night is whether they would offset the enormous costs of his new tax proposals, such as ending income taxes on service and hospitality workers and eliminating payroll taxes. Social Security.
Sen. Chuck Grassley (R-Iowa), senior member of the Senate Finance Committee, said the “jury is still out” on whether Republicans should offset the cost of the expired Tax Cuts and Jobs Act of 2017, the achievement legislative branch of Trump in his first term. .
But he said in June that new proposals, such as protecting income and Social Security benefits from taxation, that were not part of Trump’s 2017 tax law, should be offset by spending cuts or revenue-raising measures.
“When we did this with regular tax extenders, we always said it’s just an extension of existing law, which doesn’t need to be offset. Now, would this apply to something as big as 2017? [tax law] and the repetition of this? It would certainly have to compensate by introducing new things,” he told reporters.
The Committee for a Responsible Federal Budget (CRFB) has estimated that Trump’s proposal to exempt tips from income and payroll taxes could add between $150 billion and $200 billion to the debt over 10 years, although experts in politics warn that the impact could be much greater depending on how it affects behavior.
And the nonpartisan policy group estimates that Trump’s proposal to eliminate taxation of Social Security benefits would increase deficits by $1.6 billion to $1.8 billion by 2035.
The Congressional Budget Office predicts that the extension of Trump’s expiring tax law would add $4.6 trillion to the deficit over 10 years.
There is also growing discussion about whether Republicans should take on Medicare and Social Security, two of the biggest drivers of the federal deficit, if they gain unified control of the government, with some lawmakers warning that both entitlements face imminent insolvency.
“Some people consider this out of bounds, but I’ve always said we have to look at all of this,” said Sen. Ron Johnson (R-Wis.), who wants the programs to be included in a broader discussion about how to reduce spending deficits. .
“I said we shouldn’t have two different parts of our budget, discretionary and mandatory. It should be: here’s the budget, this is what we spent. So we are forced to look at how much money we are spending that we don’t have and do everything we can to preserve and save these programs,” he said of Medicare and Social Security.
Johnson warned that the federal debt will be close to $50 billion when Medicare and Social Security are predicted to become insolvent, making it much more difficult for policymakers to tap the federal government’s general fund to keep benefits from dwindling. drastically.
The Medicare hospital insurance trust fund was projected to be unfunded until 2028, but is now expected to have enough funding to last until 2036 due to a stronger-than-expected economy.
Social Security trust funds are now expected to run out in 2034.
“We better start looking at the entire federal budget and figure out what we can do to control all the spending,” Johnson said. Congress “got the pandemic and we just dramatically increased spending across the board, which affected inflation and interest rates.”
“It’s completely out of control,” he said.
Republican leaders are under pressure from conservatives to take federal deficits and debt more seriously than they did in Trump’s first term.
“What do you hear Republicans saying all day now? Bidenomics, Bidenomics, inflation. How much debt has Trump added? Almost US$8 trillion. How much is Biden adding? Eight trillion [dollars.] Who is responsible for inflation? Both parties. I’m honest enough to say that,” said Sen. Rand Paul (R-Ky.).
Paulo said “we have to look at all expenses”.
“I think there are ways to look at Medicare, Medicaid, food stamps without reducing benefits, but just reducing waste and administrative costs,” he added. “Medicare has a trillion-dollar budget. Could you save 1% on Medicare by adjusting part of your administration?”
But other Republicans are trying to take Social Security and Medicare off the table early in the discussion, pointing to Trump’s campaign promise not to touch those programs.
“We try to deal with spending by only looking at discretionary spending. In fact, discretionary spending has not increased as much as mandatory spending. Given that President Trump and President Biden have said they don’t want to touch either Medicare or Social Security… I think it’s worth looking at other mandatory spending,” said Sen. John Cornyn (R-Texas), referring to generally to other mandatory programs, such as Medicaid, food stamps, veterans programs, and school lunch programs and Head Start.
“It’s an entitlement and it’s been growing at about 7 or 8 percent a year,” he said of other mandatory spending, which increases automatically and is not set by Congress’ annual appropriations process.
Cornyn, who is running to succeed Sen. Mitch McConnell (R-Ky.) as the next Senate GOP leader, said Republican lawmakers also need to consider closing special tax breaks and loopholes if Trump wins and they recover control of the Senate.
“We also need to look at the tax code. I think the last number I saw is about $1.8 billion in tax expenditures. Some of them are legitimate deductions and things like that, but some of them are subsidies, transfer payments and basically social welfare programs,” he said.
Republican lawmakers regularly propose sharp cuts to discretionary spending, but there is growing recognition within the Republican Party that cuts to annual appropriations bills will not go far enough to have a significant impact on future deficits.
And policy experts stress that it is impractical to cut discretionary spending through the budget reconciliation process, which Republican senators would use to get Trump’s agenda past a Democratic filibuster in the Senate.
This story originally appeared on thehill.com read the full story
