by Greg Valliere, AGF Management Ltd.
DEMOCRATS IN THIS TOWN have been hand-wringing about their prospects in the presidential race; Las Vegas oddsmakers have made Donald Trump the clear favorite But, inexplicably, he gave Democrats a major opening this week — Social Security, the third rail that politicians never want to touch.
WE TALKED WITH REPUBLICANS YESTERDAY who were incredulous that Trump would casually tell Fox and CNBC interviewers that he will take on Social Security reform later this year, apparently after the election.
NANCY PELOSI AND OTHER DEMOCRATS immediately pounced, claiming there’s a secret Republican plan to cut Social Security benefits. There’s no plan, although most Republicans agree that deficit reduction cannot be accomplished without entitlement cuts. The irony is that neither Republicans nor Democrats really care about deficit reduction.
BUT THERE’S A LONG LIST of Social Security options, most proposed by Paul Ryan several years ago, that make Republican lawmakers very nervous. Many of them were on the phone to the White House yesterday, urging no further Trump comments on the subject.
DAMAGE CONTROL: The president then sent out a tweet that seemingly disassociated himself from his own comments the previous day on Social Security and Medicare cuts — Trump said he wants to “strengthen” retirement programs. That wasn’t enough to quell the furor; one Republican staffer bemoaned the astonishing 142 tweets that Trump sent out on Wednesday. “When you tweet that much and say anything to make headlines on Fox, controversy is inevitable,” our source said.
POLITICS ASIDE, THERE’S A CASE for slowing the growth of entitlement programs like Social Security. Experts have proposed reforms of the cost of living component,
raising the eligibility age, increasing Social Security taxes, tightening disability and eligibility rules, more aggressively means-testing benefits, etc. — but chances of enactment are close to zero.
TRUMP THINKS HE CAN CUT A DEAL on virtually every issue, but this is one he needs to avoid; he can’t out-bid the likes of Bernie Sanders, who wants to expand Social Security benefits.
ONCE TRUMP WINS ACQUITTAL IN THE IMPEACHMENT TRIAL, he will move on to other issues — including a tax cut that would lower middle class rates to about 15%. That has little support in the House, where it will be a tough sell without business tax increases. But Social Security reform is a virtually impossible sell, and Democrats are smacking their lips — Trump has given them an issue.
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This post was first published at the AGF Perspectives Blog.
