Hawley wants to shield Social Security, Medicare from debt ceiling talks. Experts say it won’t work

Sen. Josh Hawley introduced a bill Wednesday to prevent Congress from using Social Security and Medicare as a tool in negotiations over the debt ceiling, as some members of his party have talked about making changes to the programs.

“These are key programs that, frankly, every American relies on,” said Hawley, a Missouri Republican. “They pay into it and every American expects when they retire, that they will be able to collect that Social Security benefit they paid into and also the Medicare health care benefit that they had paid into.”

Hawley’s bill would effectively aim to eliminate the debt ceiling for the two programs, allowing the Treasury Department to continue borrowing money to pay for Social Security and Medicare even if Congress fails to allow them to borrow more money to pay the rest of the government’s bills.

But Hawley’s plan ignores the interest payments the Treasury Department would have to pay in that situation and the details of how the government borrows money to pay its debt. If the department can’t borrow money and can’t pay interest on its debt, the country would default, triggering chaos in the economy.

“It pretends that Social Security recipients and Medicare recipients are not actually part of a broader economy that would be completely hammered by this incredibly irresponsible action,” said Wendy Edelberg, a senior fellow in economic studies at the Brookings Institution, a Washington-based policy think tank. “Like, you don’t think all of those Social Security recipients are going to care when the stock market crashes?”

House Republicans are attempting to secure spending cuts in order for their vote to raise the debt ceiling. But while the two are related, they are different processes. Congress typically passes a bill to determine government spending, like the recent $1.7 trillion spending bill. Raising the debt ceiling doesn’t authorize new ceiling, it instead gives the Treasury Department the ability to pay its bills.

“We should never flirt with not paying our credit card bill,” said Sen. Tim Kaine, a Virginia Democrat who grew up in the Kansas City region.

While it is possible to give instructions to the Treasury Department to focus solely on Medicare and Social Security if the government fails to raise the debt ceiling, it could be complicated.

“It directs Treasury, a fiscal department, to prioritize certain programs above others,” said Casey Burgat, a legislative affairs professor at George Washington University. “Their job is basically to spend money on what Congress tells it to spend it on, in the amount that Congress tells them to spend it. This just complicates that, it adds another layer of ‘prioritize this’ while not having the limit raised to pay others. It just creates another layer of complexity.”

It is unlikely that Hawley’s bill would make it through Congress. Instead, it appears to be part of a larger statement the Missouri Senator is making about the priorities of the Republican Party.

After the mid-term elections, Hawley declared the old Republican Party “dead” and said it needs to focus on the type of voter that is rapidly becoming its base: working class, conservatives, often from rural parts of the country.

Edelberg said she saw the bill as a political attempt for Hawley to say he was doing everything he could to protect Social Security and Medicare amid a game of political chicken over the country’s ability to pay its bills.

“Given that they know that this has no chance of passing, given that this is three pages, and not even a full three pages, and they’ve clearly not talked to anybody who is going to explain actually how Treasury auctions work,” Edelberg said. “The logic of it doesn’t work in terms of interest payments and any anything like that.”

Social Security and Medicare are popular programs used by most senior citizens. For people who struggled to save money for retirement, it is a vital part of their retirement income. According to the Social Security Administration, 37% of women and 42% of men older than 65 rely on Social Security for at least 50% of their income. 12% of men and 15% of women older than 65 rely on the program for 90% or more of their income.

But while the programs have become an essential part of America’s social fabric, the Congressional Budget Office estimates that Medicare is expected to face financial trouble by 2028 and Social Security might be in a similar position by 2034.

There have been efforts to reform the programs in the past. During the Reagan administration in the 1980s, Congress came to an agreement that raised the retirement age and increased taxes to help pay for Social Security. In the early 2000s, President George W. Bush led a push that would have changed the structure of Social Security to partially privatize the program that failed to make it through Congress.

“Keeping it solvent and steps to save it I think are absolutely vital, what I’m talking about is cutting it,” Hawley said. “In my mind, those are two different things.”

Hawley is not the only Republican who doesn’t want changes to the programs to be part of debt ceiling talks. Former President Donald Trump has also said Republicans shouldn’t touch Medicare and Social Security.

And as members of the House Republican conference have talked openly about changes, leadership has pushed back. Rep. Jason Smith, a Republican who represents southeastern Missouri, has said his party will protect Social Security and Medicare, but has declined to say whether that will mean changes to the program.

“The Republican Party is the party of the working class,” Smith said last month on Fox Business. “We’re going to do everything we can to protect and preserve Social Security and Medicare.”

House Speaker Kevin McCarthy, a Republican from California, has also said Social Security and Medicare should not be a part of the debt ceiling talks.

He met with President Joe Biden on Wednesday while the two are at loggerheads, with McCarthy demanding spending concessions and Biden saying he won’t negotiate.

Edelberg said she considers plans for what to do in the event of a default as irresponsible, because the people making those plans have the ability to avoid the chaos that comes with default by simply raising the debt ceiling.

“The only the only good outcome here is Congress acting and simply raising the debt ceiling,” she said.

©2023 The Kansas City Star. Visit kansascity.com. Distributed by Tribune Content Agency, LLC.