Mike Johnson, the new speaker of the U.S. House of Representatives, is on record making bold and dramatic proposals to cut and reform Social Security and Medicare.
And his ideas are likely to have a key role in the coming political battle over both programs, which face major financial crises in the years ahead that may only be resolved by deep cuts to benefits or by higher taxes.
In 2019, Johnson and his committee proposed sharply scaling back the future cost-of-living adjustments to Social Security benefits for higher-income and even middle-income people.
He also proposed a total overhaul of Medicare, switching it over to private insurance companies and drastically cutting how much the federal government spends on better-off seniors. The proposals would move both programs more toward means-tested benefits, targeting them to the people who need them most, rather than to all seniors.
Johnson and his committee also proposed raising the age of eligibility for both Social Security and Medicare by several years and ensuring that age would keep rising in the future as U.S. life expectancies rise.
Since Johnson’s election as House speaker on Oct. 25, those proposals have been slammed as extremist by liberal critics and many in the media.
But Johnson says they are an attempt to balance the programs’ books without having to raise taxes. The trustees of the Social Security and Medicare trust funds revealed in their latest annual reports that the
two programs have a total funding gap of $25 trillion, almost equal to the annual U.S. gross domestic product. This is on top of the official national debt, which is also about equal to GDP.
That $25 trillion figure doesn’t include the future funding needs of Medicare’s nonhospital benefits, which will be paid out of general taxation. Nor does it include the present value of the two program’s unfunded liabilities beyond the next 75 years, which amount to trillions more even in today’s dollars.
On current projections, Medicare’s trust fund is due to run out in 2031 and Social Security’s in 2034. Without changes to the law, that would immediately trigger deep cuts in payments.
On Social Security, Johnson and his committee in 2019 proposed ending all annual cost-of-living adjustments, or COLAs, for retirees with an annual income of more than $85,000 for single people, or $170,000 a year for joint filers. They also proposed phasing out auxiliary Social Security benefits, such as spousal and child benefits, for higher earners.