Republicans Plan Showdown Over Social Security and Medicare: Report

Plus: A ‘genius grant’ to lower drug prices ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Good Wednesday evening. Tomorrow morning will bring the latest reading on inflation as the Bureau of Labor Statistics releases its monthly Consumer Price Index (CPI) report. The overall CPI for September is expected to come in at an 8.1% rate, according to a [Bloomberg survey]( of economists, while core inflation excluding food and energy is projected to climb 0.4% month-over-month and 6.5% from last year, matching the highest rate since 1982. Also tomorrow, Social Security will announce its cost-of-living adjustment for next year, which is expected to be around 8.7%, the largest in four decades. Check back tomorrow for more on the new numbers. Until then, here’s what we’re watching. Republicans Plan to Use Debt Limit Leverage to Cut Social Security, Medicare: Report Republicans in the House are planning to use a potential showdown next year over raising the federal debt limit to make changes in Social Security and Medicare, Bloomberg’s Jack Fitzpatrick [reports](. The developing plan hinges on Republicans winning control of the House in the midterm elections, an outcome that is looking likely. Four GOP lawmakers who are vying for leadership of the House Budget Committee in the event of a Republican victory told Fitzpatrick that the need to raise the debt ceiling could give them the leverage they need to force Democrats to make concessions. "The debt limit is clearly one of those tools that Republicans — that a Republican-controlled Congress — will use to make sure that we do everything we can to make this economy strong," Rep. Jason Smith (R-MO), the senior Republican on the current Budget Committee, said. Republicans are still discussing exactly what changes they might try to enact. "What would we consider a win?" said Rep. Lloyd Smucker (R-PA), who is interested in the top spot on the Budget Committee. "What would we consider to be a fiscally responsible budget?" Although the details are still up in the air, one theme is clear: House Republicans want to reduce federal spending, and the major entitlement programs are a target. Rep. Buddy Carter (R-GA) Carter said that Republicans’ "main focus has got to be on nondiscretionary — it’s got to be on entitlements." Shrinking the safety net: One option reportedly being discussed is raising the eligibility age for Social Security and Medicare, the two largest mandatory spending programs. Each faces financial squeezes in the coming years as the baby boomers age and continue to retire. Under current rules, the Social Security system would be forced to cut benefits starting in 2034, while Medicare could run short of funds by 2028. Earlier this year, the Republican Study Committee released a plan to raise the eligibility age for Social Security to 70 and the eligibility age for Medicare to 67. The increases would be phased in over time and once the target is reached, the eligibility age would then be indexed to life expectancy. The lawmakers also called for increased means testing in the Medicare program, and a privatization option for Social Security. Other options being considered include more stringent work requirements and income limits for what Smith called "welfare programs," including the Supplemental Nutrition Assistance Program more commonly known as food stamps. And new caps on discretionary spending could limit spending increases over 10 years. One thing that won’t be cut: defense spending. Rep. Jodey Arrington (R-TX) told Bloomberg that he wants to cut nondefense spending in order to provide more money for the military. Willing to risk "catastrophe"? Republicans say they are leery about pushing too far in their demands, but many experts think that any effort to use the debt limit as leverage in negotiations is unacceptably risky. Treasury Secretary Janet Yellen has warned that defaulting on U.S. debt payments — which would occur if the U.S. failed to raise the debt ceiling — would cause a "catastrophe" in the global economy. Speaker Nancy Pelosi (D-CA) accused the GOP of taking huge risks in order to cut important social programs. "House Republicans are openly threatening to cause an economic catastrophe in order to realize their obsession with slashing Medicare and Social Security," a Pelosi spokesperson told Bloomberg. "As House Republican leaders’ own words constantly reveal, dismantling the pillars of American seniors’ financial security is not a fringe view in the extreme MAGA House GOP, it is a broadly held obsession at the core of their legislative agenda." House Budget Committee Chair John Yarmuth (D-KY) also criticized Republican plans. "Holding the full faith and credit of the United States hostage to implement an extreme and unpopular agenda is not governing, it’s desperation," Yarmuth said in a statement. "Congressional Republicans are so hellbent on gutting Social Security and ending Medicare as we know it that they are willing to risk economic catastrophe to get it done. This is a desperate attempt to shower the wealthy and big corporations with even more tax giveaways by intentionally sacrificing the needs of American families." Democrats do have one option for disarming Republicans ahead of a debt ceiling showdown: They could attempt to raise the ceiling on their own during the lame-duck session at the end of the year, potentially denying the GOP the use of that weapon. But both Yarmuth and Sen. Tim Kaine (D-VA) told Bloomberg there has been no discussion among Democrats about such a plan. The bottom line: Taking a page from the tea party playbook from a decade ago, expect to see Republicans attempting to force spending reductions in the next Congress — reductions that could involve fundamental changes in the way the country’s top safety net programs operate. Quote of the Day "If the economy entered a steep downturn, we could always stop what we’re doing. We could always – if we needed to – reverse what we’re doing, if we thought that inflation was headed back down very, very quickly. For me, the bar for such a change is very high because we have not yet seen much evidence that the underlying inflation – the services inflation, the wage inflation, the labor market – that that is yet softening." — Minneapolis Federal Reserve President Neel Kashkari, speaking Wednesday in Rhinelander, Wisconsin. "I think we’re quite a ways away from anything like that," Kashkari added, referring to the possibility of a "pivot" that would have the Fed ease up in its effort to tighten monetary conditions. "I think a much more likely scenario is we will raise to some level north of 4% – maybe 4.5 – and then pause and sit there for an extended period of time while the tightening we’ve already done works its way through the economy. Rubio Requests $33 Billion for Hurricane Ian Relief Florida will need about $33 billion in emergency funds to help recover from Hurricane Ian, the state’s Republican Sen. Marco Rubio [said]( Wednesday, noting that the figure represents an initial request and will change as assessments of the damage continue. "Given the scale and scope of the disaster – by some measures the fifth strongest hurricane to ever hit the United States – the federal government has an important role to play in facilitating Florida’s recovery. I plan to make sure our state receives the emergency relief it needs to fully rebuild," Rubio said in a statement. Rubio’s emergency funding request includes $12.4 billion for the Army Corps of Engineers to repair hurricane-related damage and build coastal storm risk management, flood control and ecosystem restoration projects. Another $10 billion would go toward replenishing the Federal Emergency Management Agency’s disaster relief fund. An unusual request: "An individual lawmaker-originated supplemental funding request is unusual," Roll Call’s Lindsey McPherson [notes](. "Typically such requests are made by the White House Office of Management and Budget, and the Appropriations Committees and congressional leaders decide what parts of the administration’s request to fund. … Rubio’s decision to get ahead of the White House could be due to the fact that he’s up for reelection in November." The bottom line: Congress is out until after the November midterm elections, meaning any new relief funding for the hurricane won’t be approved for at least another month. Lawyer Working to Make Medications More Affordable Wins MacArthur ‘Genius Grant’ The MacArthur Foundation today announced its 2022 fellows, the 25 recipients of what are unofficially called "genius grants" —$800,000 prizes paid quarterly over five years, with no strings attached. The winners work in across a huge range of disciplines, from artists to attorneys and musicians to mathematicians. They include a [sociologist]( who studies the forces that drive gun ownership, a [demographer]( who is "building the most extensive database of population statistics in the world," and an ["astrodynamicist"]( working on managing traffic in space (did you know there are now almost 30,0000 human-made objects orbiting Earth?). Among the winners is Priti Krishtel, a 44-year-old health justice lawyer who is working to reform the patent system with the goal of making medications more affordable and accessible globally. Krishtel founded the Initiative for Medicines, Access, and Knowledge (I-MAK) and is a critic of the ways that pharmaceutical companies use — or game — the patent system to extend their monopolies and delay lower-cost versions of their biggest moneymaking drugs. "I-MAK has successfully contested patents worldwide, saving governments billions of dollars in public health spending and giving millions of people access to life-saving treatments," the MacArthur Foundation says on its website, adding that the group publishes a series of reports detailing how drugmakers exploit the U.S. patent system. "Patents are supposed to be a time-limited monopoly. They’re supposed to be a reward for invention," Krishtel says in a video on the foundation site. "When we don’t have competition in the market, drug prices explode out of control. And the consequence for our health system, for patients, for families who are waiting for life-saving or life-maintaining medication, it’s personal and it comes at a huge cost to human lives." Read more about the MacArthur fellows at the foundation’s [site]( or [The New York Times](. --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. 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What to Know]( – Associated Press Views and Analysis - [Health Care Inflation Is Coming for Biden]( – Sam Sutton, Politico - [The Trouble With Telling the Fed to Stay the Course]( – Clive Crook, Bloomberg - [The Right Way to Pull Back on Covid Spending]( – Bloomberg Editors - [Secular Inflation]( – Michael Spence, Project Syndicate - [Why Are ‘Ten Million Jobs’ So Incendiary?]( – Stanley B. Greenberg, American Prospect - [What Great Resignation? Workers Are Staying Put]( – Justin Fox, Bloomberg - [How to Make a Semi-Fascist Party]( – Jonathan Chait, New York Copyright © 2022 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](