President Biden’s latest budget proposal will be released on Thursday, and it comes in the midst of a battle over the debt ceiling and debates in Congress over federal spending. A president’s budget is largely ignored by Congress, especially when its makeup is hostile to the White House’s posture, but Biden’s document is a bold attempt to make known his stance toward protecting the oft-politicized Medicare. He’s going to fund it until 2050 without adding to the deficit. But is this actually possible?
As laid out in his op-ed in The New York Times, Biden is proposing a two-pronged approach to this goal. One of them is using the Inflation Reduction Act’s provisions giving Medicare more negotiation power over drug prices and establishing rebates for excessive drug prices (the president wants this negotiation power to be expanded). The other is a Medicare tax rate increase on $400,000+ earners from 3.8% to 5% and end certain tax loopholes associated with Medicare. The money saved from these actions would then go into Medicare’s trust fund to keep it solvent for another generation.
The president has ambitious goals, and his entire budget would reduce the deficit by $2 trillion over the next decade if it was followed to the letter. The reasoning behind funding Medicare until 2050 is sound when you consider that the Inflation Reduction Act already did a lot to boost Medicare’s ability to cut costs. If we’re talking about Biden’s proposal as a hypothetical, it’s very possible that it would be able to fund Medicare that long.
However, the true problem is that Republicans would never agree to it. While Medicare isn’t a ticking time bomb as some have claimed, the total Medicare spending is projected to grow from 4% GDP this year to 6% in 2040. Without consensus in Washington over how to fund it and the insistence by both parties that no one touch it, the program will become a financial nightmare for the next generation to keep paying for.
Perhaps Biden could indeed keep it funded until 2050, but due more so to partisanship than policy, it won’t happen.
