If anyone doubted President Joe Biden’s commitment to running for re-election next year, they need only examine his administration’s “plan” for extending Medicare’s solvency, published in advance of Thursday’s budget release. Rather than taking a serious approach to solving Medicare’s funding difficulties, the plan instead engages in political gamesmanship over the health care of millions of seniors. But an administration that wants to play games over Medicare should be careful what it wishes for because Republicans have ammunition to respond in kind.
The plan fails serious policy tests on several fronts. First, by relying largely on revenue to close shortfalls in Medicare’s Hospital Insurance Trust Fund, it ignores the program’s structural imbalances. None other than President Barack Obama said in 2011 that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up.” Four years after those comments, Obama signed legislation that restructured elements of the Medicare benefit to lower program costs. If Obama remained active in politics today, Biden would likely attack him for “cutting” seniors’ benefits.
Second, the plan suggests diverting $200 billion from an expansion of drug price controls to improve the solvency of the Medicare Trust Fund. But this proposal comes mere months after Democrats diverted an even larger amount from the Part D prescription drug benefit to fund climate pork projects as part of last summer’s partisan spending blowout. It seems highly disingenuous for Biden, having raided Medicare last year to suit his own political objectives, now to claim he will use the program’s remnants to extend its solvency.
Third, the largest source of Medicare “savings” comes from a proposal to divert funds raised by Obamacare’s net investment income tax into the Medicare trust fund. This change would not raise any additional revenue, but instead would double-count existing funds as both paying for Obamacare and improving Medicare’s solvency. When first included in the administration’s budget two years ago, the Committee for a Responsible Federal Budget estimated that more than 60 percent of the proposed “improvement” in Medicare’s solvency would come from what amounts to a massive budget gimmick.
Fourth, the plan would raise additional revenue via a tax Biden himself went out of his way to avoid. The plan would require all small business owners to pay the 3.8 percent payroll tax on all distributions from their companies, and increase the tax’s rate from 3.8 percent to 5 percent for those earning over $400,000 per year. But Biden and his wife Jill both used this provision — which the Treasury claims allows “business owners, particularly those with high incomes, to avoid paying their fair share of taxes” — to circumvent over $500,000 in payroll tax obligations to Medicare and Obamacare.
Republican Response
If the Biden administration wants to engage Republicans in political games over Medicare, the president’s tax returns provide the GOP with ample opportunity to respond in kind. Multiple tax experts believe that Biden not only used the loophole his administration now wants to close but abused it in ways that violate IRS guidelines. For these reasons, last year I filed a whistleblower complaint with the IRS about Biden’s returns, which the IRS dismissed within a few short weeks.
While the White House recently issued a new statement implying that the IRS has blessed the president’s tax arrangements, outside experts still harbor serious doubts. Steve Rosenthal, of the left-leaning Tax Policy Center, went so far as to tell factcheck.org that, if he were chairman of the House Ways and Means Committee, he would investigate why the IRS didn’t pursue Biden for underpayment of taxes in 2017 and 2018, because Biden paid himself an unusually low salary, such that he could avoid paying Medicare and Obamacare taxes on most of his income.
Given the ways in which Democrats spent years pursuing President Donald Trump’s tax returns, and then released those returns to the public, Republicans have every reason to question the IRS’s handling of Biden’s questionable tax behavior. And after Democrats used their partisan spending spree to empower the IRS to crack down on “wealthy tax cheats,” lawmakers should ask whether and why the IRS avoided targeting the current occupant of the Oval Office. An investigation would also illustrate how President Biden supports the Medicare program — only up until the point he has to pay for it.
In October 1984, then-Sen. Biden said he supposed freezing all federal spending — including Medicare and Social Security payments — because he claimed the American people “are not stupid,” and that voters “understand that in order to get something done, everybody has to be in the barrel.” His proposal demonstrates how, over the past 40 years, Biden has flip-flopped not just on the need to reduce federal spending, but on his views of the intelligence of the voters he will soon ask to re-elect him.
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