Pence Puts Social Security Cuts Back on the Table

Happy Wednesday! Members of Congress have been squabbling over House Speaker Kevin McCarthy’s decision to give Fox News host Tucker Carlson access to thousands of hours of January 6 video footage. The move has been hailed by some on the right, while critics have expressed concerns about the potential for political skullduggery. “Look, all of this is not in search of the truth — with Kevin McCarthy or with Tucker Carlson," said Rep. Jamie Raskin (D-MD). "It’s in search of a conspiracy theory."

Meanwhile, what may be the world’s oldest pub was discovered in southern Iraq, complete with an oven for snacks, a primitive refrigerator and jars that may hold the remains of ancient Sumerian beer.

Here’s what else is going on.

Pence Wants to Put Social Security and Medicare Cuts Back on the Table

In the wake of relentless criticism from both Democrats and Republicans, Sen. Rick Scott (R-FL) late last week revised his proposal to bring all government programs, including Social Security and Medicare, up for a vote every five years.

In what appears to be a response to charges that his plan would necessarily threaten the integrity of the popular programs, Scott’s 12-step plan to “rescue America” now includes the following passage:

“All federal legislation sunsets in 5 years, with specific exceptions of Social Security, Medicare, national security, veterans benefits, and other essential services. If a law is worth keeping, Congress can pass it again. Note to President Biden, Sen. Schumer, and Sen. McConnell – As you know, this was never intended to apply to Social Security, Medicare, or the US Navy.”

Some analysts are seeing Scott’s move as a clear admission that both parties now see talking about cuts to Social Security and Medicare as politically damaging. “Senator Rick Scott of Florida finally recognized … what leading figures in his party had been telling him for a year: Most Republicans no longer wish to discuss cutting Social Security and Medicare as a way to balance the federal budget and bring down the soaring deb,” wrote The New York Times’s Carl Hulse.

Not all Republicans agree. Appearing on CNBC Wednesday, former Vice President Mike Pence, who is reportedly mulling a presidential run, said that he believes the major entitlement programs must be part of the discussion, even if they are left aside during the current discussions over raising the federal debt limit.

“I’m glad to see the Republican majority saying we need to use this debt ceiling to start us back in the direction of fiscal discipline, but look, we all know where the real issue is in terms of long-term debt,” Pence said. “While I respect the speaker’s commitment to take Social Security and Medicare off the table for the debt ceiling negotiations, we’ve got to put them on the table in the long term.”

“We're looking at a debt crisis in this country over the next 25 years that is driven by entitlements, and nobody in Washington, D.C., wants to talk about it,” Pence added.

Another former high-ranking Republican echoed Pence on Wednesday. In an interview with The Washington Post, former House Speaker Paul Ryan criticized President Joe Biden and former President Donald Trump for placing cuts to Social Security and Medicare out of bounds.

“Biden and Trump — and I lump them in the same sentence — Biden and Trump are doing the opposite of leadership,” Ryan said. “They’re trying to scare people, and they’re playing political demagoguery with one of the most important issues facing our country this century.”

Never one to take criticism lightly, Trump, who has warned his fellow Republicans to stay away from entitlement cuts, responded quickly. “It is stunning a loser like Paul Ryan is doubling down on cutting Medicare and Social Security for elderly Americans,” Trump spokesman Steven Cheung said in a statement. “Any candidate who backs cutting Medicare and Social Security is doomed.”

Debt Default Most Likely in Summer or Early Fall: Analysis

With the need to raise the debt ceiling still hanging over Washington, a leading think tank in the nation’s capital provided a new estimate on Wednesday of when the U.S. Treasury could reach a crisis in which it can no longer make all of its payments in full and on time. According to analysts at the Bipartisan Policy Center, the so-called X Date could arrive as soon as June, though it is more likely to occur a bit later in the year, assuming Congress does not act before then to eliminate the threat.

“We think the most likely time when they were not able to find the government is sometime in the summer or early fall, but that there’s a slight chance that we run up against this very close to the ground point in mid-June or early to mid-June,” Shai Akabas, director of economic policy at BPC, told reporters on a press call.

The U.S. has already bumped up against the $31.4 trillion debt limit, forcing the Treasury to take what it calls extraordinary measures to continue to make its payments on time. The new estimate of when the X Date could fall is consistent with an analysis released last week by the Congressional Budget Office, which found that it is most likely to occur sometime between July and September.

The wide range for the latest estimate is driven in part by uncertainties surrounding tax collections this spring. “The government is projected to spend more than $3 trillion and take in approximately $2.5 trillion between February and June 2023,” BPC said in a press release. “Variation of a few hundred billion dollars in either direction would not be shocking, yet would markedly affect the X Date. As a result, the projection window is wider than usual, but will narrow as it gets closer.”

BPC also provided a warning for lawmakers, encouraging them to act sooner rather than later to raise the debt ceiling. “If not resolved in a timely manner, this year’s debt limit showdown could lead to further downgrades of the United States’ credit rating and broad economic disruption,” BPC said. “Although Congress has thus far avoided the worst outcomes by increasing or suspending the debt limit before reaching the X Date, previous debt limit episodes have imposed real costs on Americans. Taxpayers have been on the hook for increased interest payments on the federal debt, and investors have doubted the creditworthiness of the U.S. government. In fact, interest rates on short-term Treasury securities that mature this summer have already started to rise, demonstrating a degree of concern in the market.”

Quote of the Day: Inflation Risk

“If inflation continues to come down, I think we’ll be fine. Our risk now is inflation doesn’t come down and reaccelerates, and then what do you do? We are going to have to react, and if inflation doesn’t start to come down, you know, you risk this replay of the 1970s ... and you don’t want to get into that. Let’s be sharp now, let’s get inflation under control in 2023.”

— St. Louis Federal Reserve President James Bullard, speaking to CNBC Wednesday. Noting that recent employment and sales data indicate that the economy is still stronger than many analysts might have expected, Bullard said he would like to see the Fed continue to move aggressively against inflation, to ensure that its effort is successful this year.

At the most recent Fed meeting earlier this month, the minutes of which were released Wednesday, Fed officials unanimously agreed that the central bank needs to do more to combat inflation, including additional rate hikes. “Participants generally noted that upside risks to the inflation outlook remained a key factor shaping the policy outlook,” the minutes say. “A number of participants observed that a policy stance that proved to be insufficiently restrictive could halt recent progress in moderating inflationary pressures.”

It remains to be seen how high rates will go, with much depending on the economic data that emerges in the coming weeks. Bullard told CNBC that he expects the key Fed rate to top out close to 5.4%, up from the current range of 4.5% to 4.75%.

Number of the Day: 31 Million

Enrollment in Medicare Advantage grew by more than 1 million this year and now totals roughly 31 million, according to new data from the Centers for Medicare & Medicaid Services. Nearly 30.9 million people have enrolled in Medicare Advantage plans for 2023, while another 300,000 have enrolled in commercial Medicare-Medicaid plans.

That means that about half of all Medicare beneficiaries are now enrolled in Medicare Advantage plans, which allow private insurers to provide health coverage for seniors while receiving fixed payments from the federal government. A majority of Medicare Advantage plans are offered by five major providers – UnitedHealthcare, Humana, Aetna, Kaiser Permanente and Elevance – which have reported billions in profits from the program, even as they have raised concerns about their billing practices.