Biden’s Budget: The Real Threat to Social Security and Medicare

Anyone who wants to protect Social Security and Medicare should reject President Joe Biden’s newly released budget.

by Newt Gingrich

Anyone who wants to protect Social Security and Medicare should reject President Joe Biden’s newly released budget.

The reason is simple: Biden’s proposed tax and regulatory increases would crush the economy. Undermining economic growth would lead to dramatically lower tax revenues – including revenues for the FICA tax – the primary funder of Social Security.

As the Tax Foundation summarized it:

“[Biden’s budget plan would] add up to almost $4.7 trillion in new taxes targeted at businesses and high-income individuals. The major changes include higher marginal tax rates on corporate, individual, and capital gains income; a complicated new minimum tax on high-net-worth individuals; and increases to Medicare taxes. The negative effects of higher tax rates on saving, investment, and entrepreneurship would have economy-wide repercussions, ultimately harming workers, international competitiveness, and domestic investment.”

The net result of Biden’s proposals would be to accelerate the trend of Medicare and Social Security running out of money – not reverse it.

Of course, Democrats claim Republicans are plotting to gut the programs. Biden can talk all he wants about taking out a veto pen to stop any effort to cut Medicare or Social Security. This is a phony dance designed to rabble-rouse against the Republican Party. As I write in my upcoming book, March to the Majority, this is a lazy, dishonest tactic Democrats have used since 1982.

The fact is: There’s no Republican proposal to cut Social Security or Medicare. It’s a total lie. Republicans are trying to modernize the health system to help people live longer and healthier lives – and have greater opportunities. Improving an old, expensive, ineffective system so that it costs less and works better is not a cut.

This is the same tactic Democrats use when protecting other big government golden calves. Democrats claimed we “cut” welfare when I was Speaker. Indeed, the welfare budget did go down – because more people had jobs and fewer people needed to be on welfare. Same old dogs, same old tricks.

As Steve Moore reported in his latest Committee to Unleash Prosperity Hotline, committee senior fellow Casey Mulligan wrote that Biden has it backwards:

“By advancing policies that hinder the economic growth that drives prosperity, Mr. Biden and his Democratic colleagues are the ones depriving Social Security and Medicare of the hundreds of billions of dollars those programs need to remain solvent.”

Mulligan estimated that Biden’s growth-hindering policies since 2020 will ultimately strip $400 billion to $900 billion out of Social Security and Medicare – and this will get much worse if his budget is passed.

So, while Biden tries to focus the country on a non-existent Republican threat, the real danger to Social Security and Medicare is his own effort to double the capital gains tax. No one is going to sell assets if they have to pay 45 percent to the federal government (and more to the state in some areas). As economist Art Laffer, author of the Laffer curve model, reported:

“Biden’s plan to raise the capital gains tax rate to 44.6% would mean that investors could pay an effective tax rate of 86% on the after-inflation profits from owning an investment – and that’s assuming inflation returns to its 2% Fed target. If the inflation rate stays on its current path of 6.7% the real cap gains tax could reach above 110%.”

With sustained tax increases, bigger government spending, and more bureaucrats and regulations, the Biden budget is a recipe for collapsing the economy – and a collapsing economy will bankrupt Medicare and Social Security.

Republicans should turn the table on Biden.

He wants to have a debate about saving Medicare and Social Security. Let’s have it.

Republicans should introduce resolutions in the House and Senate outlining the scale of damage the Biden Budget would do to Social Security and Medicare. They should demand that he withdraw it and introduce a budget that protects Social Security and Medicare.

Let the Democrat House and Senate members face this dilemma: Will they vote with Biden, cripple the economy, and devastate Social Security and Medicare to benefit federal bureaucrats; or will they vote with Republicans, strengthen the economy, and save Social Security and Medicare for the American people?

That’s the real fight over Biden’s Budget. Republicans should take it head on.

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