Take Social Security: I happen to believe that the program does need to be modernized. But until the economy is in stronger shape, there isn’t likely to be much support for a sweeping overhaul. A better approach would be to shore up Social Security’s finances by encouraging older Americans who can keep working to do so. One painless way to do that would be to eliminate the Social Security payroll tax for workers above the age of 62, a reform that would sacrifice a small amount of revenue for a significant boost in labor-force participation among the old and experienced.
Medicare poses a much bigger long-term fiscal challenge. Yet there are smart, nondraconian ways to start dealing with it, including leveling the playing field between traditional Medicare and Medicare Advantage plans, which are proving increasingly popular with retirees. Congressional Republicans are going to want Trump to sign on to a plan to shift more of the burden of Medicaid spending to state governments. This is a risky proposition as states are constrained by balanced budget requirements that make it difficult for them to finance safety-net spending during economic downturns. Trump could agree on the condition that Congress passes legislation that will help ensure that poor states—which tend to be red states—don’t get screwed in the process.
These ideas are just the tip of the iceberg. During his address, the president at one point lamented the fact that “we’ve financed and built one global project after another, but ignored the fates of our children in the inner cities of Chicago, Baltimore, Detroit, and so many other places throughout our land.” If Trump really wanted to transform the political landscape, he could get behind a reformed child tax credit that would both simplify the tax code and lift many poor families out of poverty.