On The Money — Senators look toward Social Security reform

A divided government is spurring some united interest in tackling entitlement programs. We’ll also look at the ways the federal government can avoid a debt default and how Sen. Joe Manchin (D-W.Va.) is trying to bridge the debt ceiling divide.

But first, find out why the Senate GOP isn’t as eager to impeach President Biden as some of their House colleagues are. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter?

Senators eye Social Security fix, others want cuts

Some senators are eyeing a divided Congress as an opportunity to tackle reforms to Social Security, as the program faces significant solvency issues in little more than a decade.  

Changes to Social Security are a perpetually heavy lift for Congress, but they’ve gained traction as some House Republicans float cuts to it as part of debt ceiling negotiations.  

“A wise senator said that whenever you see reforms shore up those kinds of programs, it usually takes a divided Congress,” Sen. Dan Sullivan (R-Alaska) told The Hill this week.  

“So, maybe that historically bodes well for something that would make sure that Americans have a secure retirement system,” he added. 

The background:  

• The proposals in the Senate come as House lawmakers and the White House spar over whether to include Social Security and other entitlement programs like Medicare in negotiations over raising the debt limit.  
  
• Senate Republicans are generally leaving debt ceiling negotiations to the GOP-controlled House.  
  
• But separately, there has been growing chatter from both parties in the upper chamber about potential ways to help protect Social Security, which some estimates say is on track to becoming insolvent in about 12 years.  

The Hill’s Aris Folley fills us in here. 

LEADING THE DAY

Five ways federal government can try to avoid default   

President Biden and Congress have roughly four months to avoid a self-inflicted economic catastrophe. After reaching the debt limit last week, the federal government can no longer issue any new bonds to pay for spending already approved by lawmakers and presidents. 

A bipartisan agreement is the most likely and safest outcome. But partisan divides over federal spending and tumult within the GOP House majority make this fight over the debt limit one of the riskiest in recent memory. 

Here are five ways the federal government can try to keep the U.S. out of default: 

• Biden strikes a deal: Despite political bluster and threats of brinkmanship, most Washington policy analysts expect the latest showdown over the debt ceiling to end in typical fashion: a bipartisan deal to lift the debt limit attached to a budget or spending agreement. 
  
• Discharge petition: House lawmakers could theoretically force the chamber to vote on a clean debt ceiling increase through a “discharge petition.” But there are procedural hurdles and political pressures that make it difficult to avert a default through that process. 
  
• Payment prioritization: Republican lawmakers have suggested the Treasury Department could limit the harm of defaulting on the national debt by staying on top of certain payments as they come due. Legal and financial experts, however, believe this is logistically impossible. 
  
• Invoking the 14th Amendment: Some historians and legal experts say Biden can try to invoke a provision of the 14th Amendment to the Constitution, which dictates that debt owed by the federal government “shall not be questioned,” and force the Treasury Department to override the debt limit. 
  
• Minting a $1 trillion coin: Both Biden and Obama faced pressure to order the minting of a $1 trillion coin under a 1990s law that gave the Treasury secretary total authority over the issuance, design and assigned value of platinum-based coins. The platinum coin would then be deposited at the Federal Reserve and credited to the Treasury, thus avoiding a default. 

Sylvan digs in here. 

THERE GOES JOE 

Manchin meets with McCarthy on debt limit 

Centrist Sen. Joe Manchin (D) met with Speaker Kevin McCarthy (Calif.) Wednesday to urge the House Republican leader to negotiate with President Biden on legislation to raise the debt limit, a sign the senior West Virginia senator could play a pivotal role in bipartisan talks.  

Manchin’s meeting with McCarthy comes at a time when other Democrats, including Senate Democratic Whip Dick Durbin (Ill.) and Rep. Brendan Boyle (Pa.), the ranking member on the House Budget Committee, say that Democrats should not negotiate over the debt limit.  

• A source familiar with the meeting said Manchin encouraged McCarthy to negotiate with Biden to find a path forward that would avoid harming the American people.    
  
• They added that no commitments were made at the meeting. 

Manchin on Sunday called on the White House to negotiate with House Republicans over raising the debt limit, arguing it would be a “mistake” to expect Congress to authorize new federal borrowing authority without bipartisan talks. 

Alexander Bolton has more here.

IS THAT ALL?

Why the IRS says to expect smaller tax refunds this year 

The IRS is warning taxpayers at the opening of the 2023 tax filing season that they should expect smaller refunds due to pandemic relief measures that have been allowed to expire.   

A big reason is that there were no stimulus payments from the government to people to help get them through the pandemic in 2022. The last stimulus payments went out in 2021. 

• Millions received those stimulus payments as a recovery rebate credit that was effectively given as a tax refund.   
  
• Millions more received help through the pandemic through an expanded child tax credit that many progressives saw as an effective and important social safety net. That credit was allowed to expire by Congress at the end of 2021.  

A tax break for charitable deductions was also allowed to expire, which could affect more taxpayers. 

Tobias Burns has the details here.   

Good to Know

The Biden administration on Wednesday announced several steps meant to ensure access to affordable housing and protect renters from eviction.  

The measures unveiled Wednesday are part of the White House’s broader attack on the national affordable housing crisis, which has left millions of Americans struggling to find safe and secure housing within their budgets.  

Other items we’re keeping an eye on: 

• Rep. Angie Craig (D-Minn.) on Wednesday announced she’s reintroducing legislation to keep members of Congress from owning or trading stocks.  
  
• A group of House Democrats is forming a caucus to advocate for sustainable investing — a rapidly growing sector that already accounts for trillions in global investment.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.