Biden's Social Security Strategy

Plus: House Republicans plan new limits for earmarks ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Monday’s news was dominated by talk of [mysterious flying objects]( and a super Super Bowl. Reminder: Tomorrow is Valentine’s Day. Send chocolates to the address below. As always, though, you can email us at yrosenberg@thefiscaltimes.com. Biden at his State of the Union speech (Reuters) Why Biden Will Keep Hammering the GOP on Social Security President Biden spent much of last week lambasting Republicans for proposals by some in the GOP that he said would threaten Social Security and Medicare. Republicans gave fresh life to those attacks by protesting Biden’s comments loudly and indignantly at Biden’s State of the Union speech and in the days after, as the president returned to the subject during events in Wisconsin and Florida. Those states are home to two GOP senators who have proposed reforms that could affect the entitlement programs — and they also just happen to be important battlegrounds for the 2024 election. Get ready to hear a lot more about Social Security and Medicare. NBC News’s Sahil Kapur [reports]( “Biden's State of the Union and subsequent trips are viewed as a soft launch for his widely expected re-election bid, in which he intends to paint the GOP as a threat to Social Security and Medicare — the crown jewels of the Democratic-led New Deal and Great Society — seizing on decades of attempts to restructure, privatize or reduce long-term spending on the popular safety net programs.” Scott Mulhauser, a former top Biden aide who has worked on campaigns, explained to NBC why the president is likely to keep hammering the issue: “It’s a smart play for the near term in the debt limit fight, and it’s even a smarter play when we head to the 2024 re-elect,” he said. “It moves voters, it moves seniors, it moves allegiances and alliances, and it resonates.” The political fight — and the apparent consensus among Democrats and Republicans that Social Security and Medicare aren’t to be touched in any deal to raise the debt limit — means that reforms to address the long-term finances of the programs will have to wait, even as budget hawks warn that delays could make future changes more painful. And a grand deficit-reduction deal of the sort the Obama administration was willing to discuss years ago — one in which benefits would get cut as part of the compromise — may no longer be on the table. Recent comments from the White House show that the Biden administration is far more resistant to such cuts. “A wide range of Republican lawmakers have endorsed severe cuts to Medicare and Social Security benefits in the name of ‘fiscal responsibility,’” White House spokesman Andrew Bates told NBC News. “Complaining that the President is accurately shining a light on plans they don’t want their constituents to know about is very much not the defense they think.” In contrast with those Obama-era talks, Democrats are now more focused on raising revenues to preserve or expand benefits. To wit: Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) along with a host of other lawmakers have again introduced legislation that would expand Social Security benefits by $2,400 a year and extend the program’s solvency through 2096 by applying the payroll tax to earnings over $250,000 and raising the net investment income tax applied to investment and business income. House Republicans Plan New Limits for Earmarks: Report House Republicans are reportedly preparing new rules governing earmarks, those funds directed for specific projects in a member’s district. Republicans had banned earmarks when they controlled the House in 2011, but Democrats brought them back in 2021 under a new name — congressionally directed spending or member-directed spending — along with stiffened transparency rules and a cap at 1% of annual discretionary spending. Some Republicans still criticize earmarks as wasteful, though many others in the party have used them and defended the practice given current transparency rules. After the November elections, the House GOP conference voted overwhelmingly against a proposal to again ban earmarks. Politico’s Sarah Ferris and Jennifer Scholtes report that the new House Republican majority plans to place some restrictions on the types of projects eligible to be earmarked. “For instance, they would prevent lawmakers from locking in funding for items like city parks and county museums — things that might brandish a member’s name,” they [write](. “Lawmakers would still be free to secure money for projects like building bridges or water systems, according to six people familiar with the decision who spoke on condition of anonymity. … Embracing earmarks will afford Republicans more control under divided government, allowing them to dictate which projects will get billions of dollars in federal cash rather than leaving those decisions to the Biden administration.” The bottom line: Earmarks will be sticking around in the Republican-controlled House, though the rules governing their use could still be changed or tightened some. Final guidelines reportedly could be announced as soon as this month. Quotes of the Day “From our perspective, it’s been great.” − Sen. Joni Ernst (R-IA), as quoted by Politico about the slow start for the 118th Congress. “The new Congress has accomplished almost nothing so far — and conservatives are quite pleased about it,” Burgess Everett and Olivia beavers [write](. “The House and Senate have not passed any new laws, the speaker is jostling with Biden over the debt ceiling and the new Congress’ most significant collaboration was agreeing to meet for the State of the Union.” Republicans, they say, are happy to block Democrats’ agenda and try to run out the clock on the Biden presidency. “Public health at its finest is prevention — it’s invisible to the public. Nobody wakes in the morning saying, ‘I feel so grateful today I don’t have smallpox.’” — Dr. Judith Monroe, president of the CDC Foundation, a nonprofit created by Congress to foster private support for the mission of the Centers for Disease Control and Prevention. Monroe was quoted in a New York Times [article]( Monday about the poor condition of public health agencies in Mississippi, both before and after the Covid-19 pandemic. The state received an $18.4 million grant from the Biden administration to hire more public health workers but has spent only $3.6 million of that grant over the past 18 months, due to the state’s inability to attract much-needed epidemiologists and nurses to its public health system — a system that in normal times is starved for resources and held together with “baling wire and duct tape,” as one doctor put it, and unable to handle an influx of funding in times of emergency. “Stop-and-go federal funding floods public health agencies with cash during crises but starves them of funds afterward,” the Times’s Sharon LaFraniere writes. “The coronavirus pandemic shows the pitfalls of that approach.” No Federal Tax on State Relief Payments, IRS Says After asking tens of millions of taxpayers to hold off on filing their returns while it came to a decision, the IRS now says that it will not collect income taxes on one-time relief payments issued by states in 2022. The ruling applies to “special tax refunds or payments made by certain states related to the pandemic and its associated consequences,” the agency said in a statement on Friday. The state payments varied in size and type, depending on how each state structured its Covid-19 relief. California, for example, provided tax refunds worth between $200 and $1,050 to nearly 16 million people; New York provided payments of $270 to some low- and middle-income residents; and Oregon sent $600 checks to households at the bottom of the income spectrum. In its decision, the IRS said “it will not challenge the taxability of payments related to general welfare and disaster relief.” As a result, residents of these 17 states are off the hook for federal income taxes on Covid-19 relief payments and refunds, which do not have to be reported on federal tax returns: Alaska, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Residents of four states — Georgia, Massachusetts, South Carolina and Virginia — may have to report state relief payments on their federal taxes, but only if they received a federal tax benefit for state taxes that were later refunded. Stat of the Day: 88.6% In other IRS news, the tax agency says its employees are answering phones to provide customer support at a much higher rate than in previous years. An unnamed Treasury Department official [told The Washington Post]( that 88.6% of phone calls received from the start of tax filing season on January 23 through February 4 had been answered — a massive increase from the 13% answer rate last year and the 11% answer rate in 2021. Adding in the number of callers who successfully reached the automated answering system and chat support, the percentage rises to 93.3%, the Treasury source said. The soaring response rate is thanks in large part to the extra funding – $80 billion over 10 years –provided to the IRS through the Inflation Reduction Act. The IRS used some of that money to hire 5,000 people specifically to answer phones. It also invested in new technology that allows taxpayers to find a greater quantity of basic information on their own, reducing the need for help from IRS call centers. News - [GOP Senator: ‘Vast Majority’ Want ‘a Different Direction’ Than Rick Scott on Social Security]( – Politico - [Sanders, Warren, and Other Democrats Are Again Trying to Give Retirees an Additional $2,400 in Their Social Security Checks]( – Insider - [Republican Senator Warns Congress Must Take Action Now to Protect Medicare and Social Security]( – CNN - [How Biden Got Republicans to Run Away From Their History of Pushing Social Security and Medicare Cuts]( – Time - [Conservatives Gloat as Congress Starts Off With Little to Show]( – Politico - [Kevin McCarthy Leans on ‘Five Families’ as House GOP Plots Debt-Limit Tactics]( – CNN - [Republicans Are 'Debating' Their Budget Proposal Ahead of Possible Debt Ceiling Standoff: Comer]( – ABC News - [U.S. Begins Allowing Medicaid Money to Be Spent on Food]( – Wall Street Journal - [While Biden Celebrates a Soft Landing, the Fed’s Powell Is Worrying]( – Politico - [US Government Buying Another 1.5M Doses of Novavax COVID Vaccine]( – The Hill - [Era of ‘Free’ Covid Vaccines, Test Kits, and Treatments Is Ending. Who Will Pay the Tab Now?]( – Kaiser Health News Views and Analysis - [The Last Pandemic Welfare Supports Get Kicked Out]( – David Dayen, American Prospect - [As Social Security’s Full Retirement Age Moves to 67, Some Experts Say It Should Not Go Higher]( – Lorie Konish, CNBC - [Can These Lawmaker Proposals Save Social Security?]( – Aris Folley, The Hill - [Republicans Furiously Defend Insurance Company Looting of Medicare]( – Ryan Cooper, American Prospect - [There’s Nothing Fair About Republicans’ FairTax Proposal]( – Natasha Sarin, Washington Post - [Biden Is Succeeding in Building the Economy From ‘Bottom Up, Middle Out’]( – Jennifer Rubin, Washington Post - [Beyond Political Gridlock: A Congressional Road Map for 2023]( – Kelly Veney Darnell and Michelle Nellenbach, The Hill - [President Biden, Don’t Negotiate With Fiscal Terrorists]( – Karen Dolan, The Hill - [The Problem(s) With Rick Scott’s Plan to ‘Protect’ Entitlements]( – Steve Benen, MSNBC - [What Does Cutting Medicare Actually Mean?]( – Rachel Roubein, Washington Post - [Kevin McCarthy Wants This Debt Limit Standoff Resolved. Really]( – Bill Scher, Washington Monthly - [Inflation May Not Recede in a Straight Line]( – Neil Irwin and Courtenay Brown, Axios - [Move Over, ‘Transitory.’ The New Inflation Buzzword Is ‘Supercore’]( – Christine Romans, CNN - [Setting the Record Straight on the IRS's Supersized Funding]( – Sen. Mike Crapo (R-ID), Washington Examiner Copyright © 2023 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](