Opinion | Here’s a solution to DeSantis’s Social Security and Medicare conundrum

Social Security and Medicare are often called the “third rail” of U.S. politics for a reason. Because every working American receives or expects to receive benefits from these programs, any talk of reform raises the specter of unpalatable changes. That’s why so few politicians talk about reducing the spending growth in these programs even though current levels of taxation simply cannot support it for long.

Trump is taking the typical path of politicians by calling for no spending cuts in either program. His super PAC has also lashed out at DeSantis in television ads for his past backing of proposals to cut Social Security and Medicare spending and to raise the full retirement age from 67 to 70. Those ads might exaggerate, but DeSantis did support then-Wisconsin Rep. Paul D. Ryan’s proposals to reform these programs when the governor was in Congress. He also backed more stringent cost-saving ideas advanced by the House Republican Study Committee.

DeSantis’s response has been lame. An ad from his super PAC simply states that Trump is “repeating lies” and includes a clip of DeSantis saying that Republicans won’t cut Social Security and Medicare. That doesn’t address the fact that DeSantis did once support such cuts. Nor does it deal with the reality that both programs will soon be insolvent and already require hundreds of billions of dollars in transfers from the general budget. The GOP might now be more populist than it was when DeSantis was in Congress, but it still has many fiscal hawks who want to see these programs reformed.

This might seem like a classic conundrum for DeSantis: Join Trump in ruling out any changes to keep faith with populists, and he risks opening up room for more traditional Republicans such as former U.N. ambassador Nikki Haley or South Carolina Sen. Tim Scott to woo fiscal hawks. But swerve too heavily in favor of reform, and he will lose Trump’s populist constituency. Perhaps this is why DeSantis’s response has been so lacking.

But that’s a false choice. There’s another way to look at entitlements that is broadly appealing: Focus on who is receiving these benefits rather than on how much the program spends overall. If DeSantis were to do that, he would find there is an easy way to satisfy both the populists and the budget hawks.

Social Security and Medicare both have a dirty secret: They spend tens of billions of dollars each year subsidizing well-to-do seniors who don’t need, or can pay more for, their benefits. Social Security benefits are not means-tested; billionaire Elon Musk can collect Social Security when he retires. Similarly, Medicare’s hospital benefits (Part A) go to everyone on the same terms regardless of their finances. Premiums for Medicare’s outpatient and drug benefits (Parts B and D) are also only partially means-tested. The result is that millions of people who can pay full freight for their Medicare benefits don’t, and millions more use their Social Security benefits to top off their substantial private savings.

DeSantis should propose changing these elements of the programs and also blast Trump for his feckless demagoguery. The Manhattan Institute’s Brian Riedl estimates that cutting Social Security benefit growth and raising Part B and D premiums for seniors earning $100,000 or more in non-Social-Security income would save nearly $1 trillion over the next decade. Those savings would grow substantially after that, as more retirees would be affected by the changes. That’s a lot of money, and not one senior earning less than this would see any change whatsoever to their benefits or premiums.

DeSantis could also play the populist card on taxes. Universities and huge foundations have trillions of dollars in assets, which they invest just like wealthy individuals. Yet while those individuals pay 23.8 percent in federal taxes on their long-term capital gains, universities and foundations pay a mere 1.4 percent tax on their income. DeSantis should endorse significant increases in tax rates for these institutions, as proposed by some Republicans in Congress, and dedicate that revenue to support Social Security or Medicare.

Trump’s cynical and shameless pandering on entitlements is intended to dampen DeSantis’s support with MAGA types. By taking the genuinely populist approach to entitlements, DeSantis can combine the GOP’s non-Trump faction with a large share of MAGA devotees. That’s sound policy and great politics.