The Republican Party is no longer the party of free markets and small government. The 2024 GOP platform explicitly calls to “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.”
Sen. JD Vance, the party’s vice presidential nominee, has expressed sympathy for the “Bernie Bros” who supported progressive Sen. Bernie Sanders’s presidential bid, and favorably contrasted former President Donald Trump’s economic populism with “the libertarian economic consensus on the right.”
But policy makers of all ideological stripes, including populists, face budget constraints, and the finances of Medicare, Social Security and the overall federal government are on an unsustainable path.
Despite a disturbing lack of action, Democrats and previous generations of Republican leaders — those influenced by the “libertarian consensus” — have at least proposed serious reforms to address shortfalls in programs like Social Security. As we head toward the November election, voters deserve to know how populist Republicans plan to approach these difficult decisions.
In a recent interview, Vance was asked what measures he would support to deal with the large fiscal imbalances in programs like Social Security. His response was that protectionist trade policies, like tariffs, would improve Social Security’s finances by increasing labor force participation and wages, particularly among prime-aged men. These changes alone, he argued, could extend the life of the program’s trust fund by “a whole hell of a lot more than the nine or 10 years that the actuaries say that we have.”
While it’s open to debate whether protectionist trade policies would have the impact that Vance envisions, it is true that higher labor force participation and wages would reduce shortfalls in Social Security, Medicare and the overall federal budget. Indeed, many analysts (myself included) have examined policy options to reduce work disincentives and increase labor force participation, thereby easing pressure on the federal budget and making further reforms less painful.
But that doesn’t allow us to avoid hard choices: as my colleague Andrew Biggs has pointed out, even large increases in labor force participation and wage growth would have only a small impact on Social Security’s shortfall.
In contrast to Vance and the current Republican platform, Democrats and earlier generations of Republicans have grappled with tough choices and proposed more realistic Social Security reforms. For example, many Democrats have signed onto the Social Security 2100 Act, which proposes increasing taxes on high earners. Additionally, some Republicans, including former Reps. Paul Ryan and Sam Johnson, have previously proposed reducing benefits for middle- and high-earners.
Both approaches would have a significant impact on the Social Security shortfall. Both give voters a clear sense of how the parties view the tradeoffs. And both are reasonable starting points for reform, which will likely involve a mix of tax increases and benefit cuts. But the Republican approach embraced by Ryan, Johnson and others appears to have been abandoned by the new generation of party leaders.
Looking beyond the Social Security program, the tariffs on imports that Trump and Vance have called for could increase federal revenue directly, although that revenue gain would be diminished by the responses of both consumers, who would buy fewer imports, and U.S. trading partners, who would likely retaliate. Even under optimistic assumptions, the money raised by these tariffs would barely make a dent in the looming federal fiscal imbalance. Moreover, if any new tariff revenue is offset by “large tax cuts for workers, and no tax on tips,” as the Republican platform also calls for, then it wouldn’t be available to deal with existing shortfalls.
Some may point out that there was an era prior to the adoption of the federal income tax in 1913 when tariffs were the federal government’s main revenue source. But it’s no accident that Social Security, Medicare and many other federal benefit programs did not exist during this era, and that government spending was substantially lower.
The time has come for Republican populists to explain how they intend to deal with shortfalls in federal benefit programs. Policies that increase labor force participation can certainly be part of the package, but populists need to be honest about the modest impact of such policies, and clearly indicate what additional measures they would support.
Social Security is the biggest source of retirement income for most Americans, and more than 60 million people depend on Medicare. These programs’ finances are on an unsustainable path. As November approaches, voters must insist on knowing how the Republican Party intends to restore them to solvency.
Sita Slavov is a nonresident senior fellow at the American Enterprise Institute and a professor at the Schar School of Policy and Government at George Mason University