After making much to-do over budgets that don’t balance last year, the GOP went on to release tax plans last fall that would add an estimated $1.7 trillion to the federal debt, according to the nonpartisan Congressional Budget Office.
The GOP is saying, however, that they are planning to address the debt problem this year. Mandatory spending cuts (which includes cuts to Social Security, Medicare and Medicaid) will be a priority for the fiscal 2019 budget reconciliation process, which begins when the President submits his budget to Congress — typically in February. Last fall, the House budget plan contained $203 billion in mandatory spending cuts, which ultimately was scrapped after Congressional leaders concluded that trying to cut entitlement programs at the same time as cutting taxes would sink tax cuts. Thus they chose to tackle tax cuts first.
Even without the $1.7 trillion in lost federal revenues due to tax cuts, reducing growth in the federal debt would take formidable budget changes. Taxes would need to increase, not decrease, the Congressional Budget Office (CBO) estimated last year, by as much as $2,100 per household per year. If Congress chooses to cut mandatory spending instead, then Social Security benefits would need to be reduced by as much as $2,800 per person, the CBO has estimated.
A number of plans to address Social Security finances were put forward in 2017 — the most controversial of which had no public discussion. Those plans called for changes to the Social Security benefit formula, raising the eligibility age, and slowing the growth in the annual cost of living adjustment (COLA). Some Members of Congress have submitted plans that would raise more revenues for the system by increasing the amount of wages subject to Social Security payroll taxes or modestly increasing the payroll tax rate.
TSCL is surveying hundreds of older Americans this month to learn how you feel about some of the leading proposals to change Social Security, Medicare and Medicaid. We share your answers in our visits to Members of Congress, and your responses can make a difference! Please take TSCL’s 2018 Senior Survey.
Sources: “House Tax Plan May Add Over $2 Trillion To The Debt,” Committee for a Responsible Federal Budget, November 3, 2017. “On Debt Reduction, GOP Says Wait Till Next Year,” Lindsey McPherson, Roll Call, October 27, 2017.