The tsunami is upon us.
Since the Reagan era, budget experts have warned that without changes to Social Security and Medicare, a massive spending spree would ensue as baby boomers claimed their benefits and health care prices rose. Eventually, that wave would overwhelm the economy—a “demographic tsunami,” as economist Robert Reischauer called it when he headed the Congressional Budget Office. For former presidents and legislators, the crisis seemed far away: early 2020s, well into the 2030s.
It’s natural now. So it may not be a bad time for President Biden and the Republicans to agree, as they have, that these safety net programs are off the table as they grapple with the country’s debt reduction in the coming months.
Social Security and Medicare are among the biggest drivers of US debt, which now accounts for a larger share of the economy than at any time since World War II. Negotiations that drop the two programs are not serious. The Republican pledge to balance the budget is unlikely enough; without major changes in Social Security and Medicare, this is absurd. In the meantime, both will continue untouched on the path to bankruptcy, estimated at 2028 for Medicare and 2034 for Social Security.
Biden takes the first step in the debt dance of the year on Thursday as he submits his budget proposal to Congress for the fiscal year that begins in October. He would propose tinkering with Medicare to keep it solvent in the 2050s as part of an overall deficit reduction of $3 trillion over 10 years by raising taxes on wealthy Americans rather than increasing benefits. to lower. He knows it’s an offer Republicans will refuse.
Because, you know, tax increases for the rich.
Once again, a president and Congress will take another year to delay the inevitable: an agreement to strengthen the safety net for future generations before bankruptcy forces across-the-board benefits cuts.
Spare Biden the insult he otherwise deserved for not leading. Until the Republicans drop their tired, irresponsible attitude against new taxes, he is right that neither Medicare nor Social Security should go under the knife.
tax increases And Cutbacks should be part of the mix. It’s simple math. But it also means a common sacrifice.
House Speaker Kevin McCarthy said in a recent speech that “of all the dangers we face, the greatest threat to our future is our national debt.”
The biggest threat? If McCarthy really believed that, he would give up anti-tax absolutism. He will take responsibility on behalf of his party, particularly for the trillions it adds through repeated tax cuts. But then he wouldn’t be the speaker for long.
In his speech on the debt, McCarthy blamed “runaway spending by the Democrats”. He added without irony, “Health and Social Security cuts are off the table.”
The Republican anti-spending mantra ignores the fact that tax cuts are just as sure to lead to debt as spending. They continue to claim that tax cuts are different, that they are self-sufficient, despite 40 years of experience with the tax cuts of Ronald Reagan, George W. Bush and Donald Trump proving otherwise.
Even the Bush vice president acknowledged this: When Dick Cheney famously admitted the joke, “Reagan proved that deficits don’t matter,” he justified the Bush administration’s second round of sweeping tax cuts in the face of concerns about growing budget deficits . (Remember, Bush inherited a surplus.)
Unlike many tax cuts, some government spending — particularly on infrastructure — pays for itself in whole or in part, giving a return to taxpayers. according to studies.
And Republican statements belie how much they like federal spending — one terribly – for the military, farm and business grants, home roads and bridges, disaster relief and much more. And her voters like big too, even if they align themselves with the damned “big spenders” Democrats.
True fiscal conservatives balance spending And Taxes like the old Republicans did. When spending consistently exceeds revenue — as it does every year for most of our lives, regardless of who’s in power — that argues for raising taxes to restore balance. Instead, the Republicans cut them off.
When Democrats introduced the Affordable Care Act, they paid for it with taxes on companies that benefit from the care of millions of newly insured Americans. Business groups supported the compromise. In contrast, when Bush and a Republican-majority Congress created the Medicare prescription drug benefit, they put the cost in the federal bill. In collusion with drugmakers, they even banned Medicare from negotiating lower prices — a ban that Biden and the Democrats lifted last year. (His new budget calls for an expansion of Medicare’s powers to negotiate drug costs.)
Under Trump, Republicans have been largely silent as debt has risen by $8 trillion. On three occasions, at his request, Congress raised the country’s debt ceiling so that the US could continue to borrow to pay its bills. Republicans have no obligations.
However, with a Democrat in the White House, they have resurfaced as budget deficit hawks, advocating spending cuts to balance the budget before backing the debt ceiling hike this summer. But with Social Security and Medicare out of bounds, along with defense spending and interest on the debt, only 15% of the budget — pretty much everything the government does and voters want it to do — remains. According to the federal budget’s centrist committee on good governance, 85% of this small portion of spending would need to be cut to balance the budget ten years from now.
Not even the Republicans will vote for it, reducing support for air traffic control, food and drug safety, medical research, education aid, homeland security, and so on. And they don’t vote for taxes either. Which raises the specter of deadlock and devastating default for the world’s economic superpower.
This is not the tsunami that financial forecasters predicted. But it would still be a disaster. A man-made one.
Source: LA Times