The most immediate loser in that equation is Ryan. Retrenching federal entitlements has been his north star since he arrived in Congress in 1999. Throughout Ryan’s career, the policy idea most often associated with him is converting Medicare into a “premium support” or voucher system. Under that approach, the federal government would no longer pay directly for seniors’ health care, as it does now, and instead would provide them a fixed sum of money to purchase private insurance. (While premium support would still allow seniors to buy into the existing Medicare system itself, most analysts believe it would quickly grow unaffordable because only those with the greatest health needs would do so.)
The “Better Way” policy blueprint House Republicans issued under Ryan’s direction in 2016 endorsed premium support. But the speaker has not pushed it to a vote. In interviews last month, Ryan signaled his determination to force a 2018 debate on restructuring Medicare and other big safety-net programs. “We [must] spend more time on the health-care entitlements, because that’s really where the problem lies,” Ryan insisted.
Ryan is right that federal spending for the elderly is on an unsustainable trajectory, mostly because American society is steadily aging. Through 2050, the Social Security trustees estimate that the number of seniors will rise from 48 million to 86 million. The Congressional Budget Office projects that, as a result, by 2047 Social Security and the major federal health-care programs, principally Medicare and Medicaid, will consume two-thirds of all federal spending (except for interest on the national debt). That’s up from 54 percent now.
Conservatives have decried that future most vociferously, but it should concern Democrats, too. Increased spending on the elderly is already squeezing the resources available for investment in the productivity of future generations, such as education, scientific research, and infrastructure. The CBO projects that as spending grows on seniors, as well as on health care, federal discretionary spending—the portions of the budget that invest in future generations—will shrink relative to the economy.
That would not only be unfair to younger Americans, but it would also be counterproductive for the old: Seniors need more of today’s diverse youth population to reach the middle class so they can pay the payroll taxes that support Social Security and Medicare. And although some Democrats want to avoid any cuts to programs for the elderly while at the same time preserving discretionary spending, in a graying society that would require an increase in taxes and total federal spending to a level that Americans are highly unlikely to accept.
This dilemma’s logical solution is a three-sided agreement to raise taxes, impose some constraints on retirement programs, and preserve investments in future generations. Almost all serious, bipartisan deficit-reduction proposals (such as the one from the Obama-era Simpson-Bowles commission) have offered some variation on that formula. All have recognized that the only way to convince Democrats to accept entitlement cuts is to couple them with tax increases, and vice versa for Republicans.