Social Security, Medicare and Medicaid Funding at Risk with Demands for a Balanced Budget
Recently House Republicans, specifically The Freedom Caucus, proposed capping discretionary spending to 2022 levels and remaining at that level for the next decade in an effort to balance the federal budget in 10 years without raising taxes. The plan involves rescinding unspent pandemic funds, repealing mandatory spending under current infrastructure, climate, tax and health laws
In order to balance the budget in 10 years, the government would need to reduce spending or increase revenue by a significant amount. Without increasing taxes, balancing the federal budget in 10 years could require a significant cut to federal programs, including Social Security, because these programs account for a large portion of the federal budget. Congress allocates over half of all discretionary spending to national defense. The remainder funds the administration of other agencies and programs.
Social Security, in particular, is one of the largest federal programs, accounting for roughly a quarter of all federal discretionary spending. Some of the funding for Social Security programs does not come from discretionary spending, but rather mandated funding through payroll taxes. Another 25% of federal spending from non-discretionary spending (i.e. payroll tax funding) accounts for the remaining budget for Social Security and Medicare. Cuts could not be made to mandated spending absent specific legislation. However, funding for the Social Security Trust always remains at risk as the trustees report that funding is predicted to dip below a level sufficient to pay 100% of benefits in 2035.