Personal Finance

The two biggest budget programs were missing from Trump's address

Key Points
  • Medicare and Social Security were absent from the President's speech.
  • The two programs make up most of the government's mandatory spending.
  • Some experts say these programs need attention now.
President Donald Trump takes a sip of water as he delivers his State of the Union address to a joint session of the U.S. Congress on Capitol Hill in Washington, U.S. January 30, 2018.
Jonathan Ernst | Reuters

Two big items were missing from President Donald Trump's State of the Union address on Tuesday night: Medicare and Social Security.

While these entitlement programs were absent from the President's speech, together they take up almost all of the government's mandatory spending.

"The harm of neglecting them is they're underfunded," said Howard Gleckman, a senior fellow at the Urban Institute's Tax Policy Center. "There is a cliff we're going to face in a few decades, at which point the programs won't have enough to pay their beneficiaries. Real people would lose the benefits they need."

Social Security provides retirement, disability and survivor benefits to qualifying recipients, the bulk of whom are age 65 or older. The Social Security trust fund, which helps support it, is projected to be depleted by 2035. At that point, unless changes are made, recipients will receive only about 75 percent of benefits, according to the Social Security Board of Trustees.

Medicare, which provides healthcare coverage for some 50 million older Americans, is also in jeopardy.

"Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation," according to a 2017 report by the program trustees. "Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers," the report said.

Between 2010 and 2050, the population of people over the age of 65 in America will double, according to The Kaiser Family Foundation. In 2016, $912 billion of government spending went to Social Security, and $588 billion went to Medicare.

Despite repeated campaign promises by the president not to touch Social Security and Medicare, Congressional Republicans have hinted that these programs are not immune to cuts.

"We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit," House Speaker Paul Ryan, R-Wisconsin, said on a radio show in December.

Rep. Tom Cole, R- Oklahoma, told CNBC in December that "tax cuts produce growth, entitlement spending doesn't."

David Kamin, a former economic policy advisor in the Obama administration and a law professor at New York University, said Trump's silence on these programs in the State of the Union address was purposeful.

"The fact that he didn't mention any of these things indicates this isn't an area where he is willing to discuss with the American people the actual trade-offs that the tax cut involves," Kamin said.

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