You may have thought that the drubbing Republicans received in the recent election would have prompted party leaders to think more warily about promoting policies that nauseate the voting public.
You would be wrong. We know this from an op-ed published in the Wall Street Journal under the name of Sen. Mitt Romney (R-Utah). The piece appeared Nov. 10, two days after the vote, when congressional leadership was still up in the air.
The smart money, however, was already wagering that Democrats would retain their Senate majority, at least, and that although the GOP might win a House majority, it would be nowhere near as large as was expected.
Republican and Democratic administrations have run budget deficits for most of the postwar period, [which] requires on a regular basis raising the debt ceiling.
— Treasury Secretary Janet L. Yellen, September 2021
Nevertheless, Romney again teed up the traditional, and discreditable, Republican shibboleth of attacking Social Security, Medicare and Medicaid as “entitlements” that have been causing inflation. The truth is that they’re nothing of the kind, but when has that mattered to the GOP?
With the Democrats having retained their Senate majority, the chances of wholesale hacking away at these programs’ benefits have receded, for the moment.
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But since Republicans have regained their majority in the House, the possibility that they will try to hold the U.S. economy hostage to force some sort of compromise on the programs, inimical as it might be for the general public, still looms.
More on that in a moment. But if the outlook of Romney, who is often portrayed as a “moderate” or “reasonable” or at least “noncrazy” Republican, reflects that of the party’s more centric bloc, it behooves us to address it now.
Curiously, despite the GOP’s underwhelming performance on Nov. 8, Romney takes an even harder line on the social insurance programs, and an even more ignorant explanation for inflation, than his party colleagues have put forth.
Romney’s focus is on federal spending, which, as he says, Republicans have tried to rein in for years.
“Two-thirds of federal spending isn’t even voted on by Congress,” he says. “Rather, it is automatic ‘nondiscretionary’ spending on entitlements, such as Medicare, Social Security and Medicaid, and on servicing the debt. … Excessive spending not only adds to the national debt, it is highly stimulative and inflationary. The Fed has its foot on the brakes while the administration and Congress are flooring the gas pedal.”
Is that so? Consider the contradiction in these very words: Romney says that the spending he’s complaining about isn’t even voted on by Congress, yet he blames the administration and Congress for “flooring the gas pedal.”
He explicitly links the rise in inflation to what he calls “the entitlement crisis.”
Let’s stop right there. Spending on Social Security, Medicare and Medicaid isn’t a “crisis” to anyone who doesn’t have more than $85 million in net worth or — as Romney did at least at one point — six houses.
Rather, government statistics establish that Medicare is a lifeline for 64.5 million elderly Americans and Medicaid provides coverage for 83.5 million low-income Americans (including 7.1 million children).
Social Security provides retirement and disability benefits to 65 million people, including 50 million retired workers and their dependents, 6 million survivors of deceased workers, and 9 million disabled workers and their dependents.
Social Security is the most effective anti-poverty program in U.S. history. It accounts for at least 50% of the income for about half of all recipients, and more than 90% of income for about one-fourth of all seniors.
Romney says the spending on these programs is “highly stimulative and inflationary,” but that’s utter nonsense. The benefits tend to lag inflation year after year. It’s true that Social Security checks will increase next year by 8.7% thanks to the program’s annual cost-of-living adjustment, but that’s scarcely enough to cover an inflation rate that exceeded 8%, annualized, through most of this year.
In any event, it is well understood by economists that inflation this year and last was driven by many factors other than federal spending. Among them were the tie-ups of import shipments at U.S. ports, a product of the reopening of the U.S. economy as the pandemic ebbed; and excessive corporate profiteering. In any case, the inflation rate has been falling in recent months, a turnaround in the trend line that’s expected to continue.
Romney employs his fakery to argue that “some mix of changes to revenues, benefits and eligibility is necessary.”
Let’s unpack this verbal wolf in sheep’s clothing: He’s talking about benefit cuts. Romney’s mention of changes in revenues is just hand-waving — he knows that the GOP congressional caucus wouldn’t stand for revenue increases because that always means tax increases.
That leaves changes in benefits and eligibility. Does anyone really think he’s advocating increasing benefits? Of course not; the GOP has fought every proposal to improve Social Security benefits for years.
The most recent Republican proposal on Social Security, introduced in 2016 by former Rep. Sam Johnson (R-Texas), would have cut retirement benefits almost across the board, reduced annual cost-of-living adjustments, and reduced spousal and child benefits.
Johnson would also have raised the retirement age, which is part of Romney’s formula. Make no mistake: Raising the Social Security retirement age (which currently tops out at 67 for anyone born in 1960 or later) or the Medicare eligibility age (currently 65) is a benefit cut.
Romney promises that “current and near-retirees won’t be affected” by any changes, but this is an old, familiar swindle.
It’s designed to mollify older workers, who tend to go to the polls more reliably, while sticking it to younger workers, who tend to be years or decades away from having to worry about how they will be sustained in retirement and therefore hopefully won’t pay any attention to how their post-career years will be impoverished by Republican benefit cuts.
That brings us to what the GOP hopes will be its leverage in any debate over social insurance benefits: the federal debt ceiling, which will need to be raised early next year to avert a possible shutdown of government functions or even an unprecedented default on treasury securities.
We’ve reported on this variety of brinkmanship before — in fact, almost too many times to count. This time around, the GOP has been getting more specific about what it expects to achieve by holding the economy hostage: benefit cuts.
As we’ve mentioned, the debt ceiling is the single most infantile feature of U.S. policymaking. It’s also one of the most commonly misunderstood. Republicans assert that the ceiling, which caps the Treasury’s issuance of federal debt but can be raised by congressional vote, places a hard limit on federal spending and that raising it encourages more waste.
That’s totally untrue. The debt ceiling was not originally meant as a limit on the Treasury’s authority to issue debt, but rather as a way to give it more latitude to borrow. It was enacted in 1917, when Congress grew weary of having to vote on every proposed bond issuance, which it considered a pain in the neck. So it chose instead to give the Treasury blanket authority to float bonds, subject to a stopgap limitation.
There isn’t a serious economic policymaker in Washington who holds that a showdown over the debt ceiling is an effective way of reining in spending or reducing the federal deficit, or that it poses anything but a threat to U.S. financial stability.
Treasury Secretary Janet L. Yellen has advocated that it simply be abolished. In congressional testimony in September 2021 (weeks before the last deadline for an increase), she pointed out that “Republican and Democratic administrations have run budget deficits for most of the postwar period,” which “requires on a regular basis raising the debt ceiling.”
Failing to do so, she told the lawmakers, would be “catastrophic” for the economy: interest rates on home mortgages, credit card debt and other household borrowing would shoot higher, benefit checks would be delayed and government services suspended. With those consequences in mind, she said, “the debt ceiling has been raised or suspended 78 times since 1960, almost always on a bipartisan basis.”
The prospect that a Republican caucus with its back to the wall might try to exploit the only weapon at its disposal to force changes in social insurance programs that would harm millions of Americans points to the need to take the matter in hand in the near term — specifically during the lame duck congressional session that will convene after Thanksgiving, with Democrats in control of both chambers.
That may be the last chance for at least two years to repeal the debt ceiling, once and for all. Congress should take this weapon out of the Republican arsenal before it’s too late.