Tax bill could fuel push for Medicare, Social Security cuts

The tax bill that Republicans are muscling through Congress could result in cuts to entitlement spending if it significantly increases the national debt, budget experts say.

Republicans say the tax-cut package will lead to economic growth and greater tax revenues, but there are doubts even within their party about whether that growth will come to pass. 

The Joint Committee on Taxation, Congress’s official budget scorekeeper, estimated the bill would cost $1 trillion over a decade even with economic growth taken into account. Sen. Bob Corker (R-Tenn.) opposed the bill for that reason.

As the population ages and health-care costs continue to rise, the fiscal demands on entitlements like Medicare, Medicaid and Social Security are projected to grow. The projected increase in the debt from the tax package could make the situation worse, budget experts say. 

“In the past when members of Congress have been concerned about the debt, they’ve turned to these programs, so it’s not a stretch to see that they turn there in the foreseeable future,” said Tricia Neuman, a senior vice president at the Kaiser Family Foundation.

“If we are talking about the kinds of deficits” that are projected from the tax bill, “entitlement cuts are definitely on the table,” said William Hoagland, a senior vice president at the Bipartisan Policy Center.

Democrats and activist groups are seizing on the potential threat to entitlement programs to try and stop the bill and rally their base for the 2018 elections. 

They have run television ads warning the bill would result in a $25 billion cut to Medicare, and Senate Minority Leader Charles Schumer (D-N.Y.) has repeatedly said the bill will “gut” the program. 

During an exchange on the Senate floor Thursday evening, Sen. Bernie Sanders (I-Vt.) asked Sens. Marco Rubio (R-Fla.) and Pat Toomey (R-Pa.) to promise that Republicans wouldn’t cut Medicare and Social Security after passing the tax bill.

“Will you guarantee the American people there will be zero cuts to benefits in Social Security, Medicare and Medicaid?” Sanders said.  

Toomey said there were no plans to cut the programs, but activists are skeptical.

“This is a tax bill that’s coming after Medicare and Medicaid cuts,” said Eliot Fishman, senior director of health policy at Families USA. “It’s fundamentally step one of a two-step process. Nobody should be under any illusions otherwise.”

Senate Republicans on Friday scrambled to piece together their legislation ahead of a final vote. The bill passed despite the $1 trillion price tag. 

Corker wanted to add $350 billion in automatic tax increases to reduce the bill’s impact on the debt, but other Republicans balked. He originally called for a tax-increase trigger, but that provision ran into issues with the Senate parliamentarian and couldn’t be included in the bill.

On Friday, Corker announced his opposition to the legislation.

“I wanted to get to yes. But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations,” Corker said in a statement.

Corker’s worries about increasing deficits were not echoed by other rank-and-file Republicans or members of leadership. They said the bill would grow the economy, reducing the debt in the process. 

“This will be a revenue enhancer. This will not be revenue decrease overall, or else we wouldn’t be doing it,” Sen. Mike Rounds (R-S.D.) said.

“We are presupposing it is going to cause a deficit and I am not sure that is a correct presupposition,” added Sen. Bill Cassidy (R-La.). 

Republicans are also facing the possibility that the $1 trillion tax bill will trigger deep, automatic cuts to Medicare next year unless Congress stops it from happening. 

Majority Leader Mitch McConnell (R-Ky.) promised Sen. Susan Collins (R-Maine) that the cuts required by the “pay-as-you-go” or “pay-go” budgetary rule won’t happen.

Collins was a key holdout, and she said the personal promise from McConnell helped win her support for the legislation.

McConnell on Friday issued a joint statement with Speaker Paul Ryan (R-Wis.) saying the pay-go cuts won’t happen.

“Congress has readily available methods to waive this law, which has never been enforced since its enactment. There is no reason to believe that Congress would not act again to prevent a sequester, and we will work to ensure these spending cuts are prevented,” McConnell and Ryan said.

Lawmakers have voted numerous times in the past to waive the rule, but they need the support of Democrats, who have so far been reluctant to offer it.