The Fiscal State of the Union
This week's address to the nation highlighted bipartisan fiscal ineptitude.
I haven’t sat through a State of the Union address in quite a few years. It’s a tradition I simply don’t care about any more, probably in large part because it’s been a long time since I’ve admired a U.S. president enough to find value or credibility in their prepared speeches.
If the oration is about some national crisis, I’ll tune in. Otherwise, I’ll check out the highlight reel the next day.
At this week’s address, the big clip that made the rounds was President Biden proclaiming that “some Republicans” wanted to “sunset” Medicare and Social Security.
By “some Republicans” Biden was referring to Sen. Rick Scott, who, as best I can tell, is the only Republican in Congress who’s suggesting such a thing.
I should add the qualifier that Scott’s the only one who’s suggested it lately, because as Republicans in attendance booed and jeered Biden’s bad-faith remark, it was hard to miss the irony of Sen. Mike Lee’s animated pearl-clutching, being that he was once very much in favor of the idea.
Anyway, here’s the bigger problem… Both parties’ reactions to entitlements were just the latest reminder that neither Democrats nor Republicans have any intention of doing anything to fix Medicare and Social Security, which are major drivers of our national debt, and are quickly headed toward insolvency.
“The trustees overseeing Social Security project that the program’s two trust funds will run short of funding on a combined basis in 2035,” explains James Capretta of the American Enterprise Institute. “For Medicare’s hospital insurance (HI) trust fund, depletion is expected in 2028.”
For those not great at math, 2028 is just five years away.
So, why are both major political parties refusing to address this fiscally catastrophic issue, and seemingly content with just playing metaphorical violins as the Titanic sinks into the Atlantic? I suspect everyone reading this already knows the answer: political cowardice.
There were some serious entitlement-reform proposals put forth earlier this century by Republicans, led by folks like President George W. Bush and eventual Speaker of the House Paul Ryan. But each time, Democrats (and even a few fellow Republicans) successfully demagogued those efforts into defeat.
Scaring old people has long been a political winner, and nothing frightens that demographic more than telling them they’re about to be booted off their government benefits. It doesn’t matter how dishonest the claim is. The strategy of equating even minor reforms with pushing grandmas over cliffs has proven effective, especially around election-time. And that’s why politicians employ it.
Donald Trump understood this when he ran for president in 2016. During his campaign, he sharply deviated from the Republican party’s general position on the issue by vowing not to touch these programs if he won the White House. He did win, and he kept that promise. And after Trump added a whopping $7.8 trillion to our national debt in just four years, Joe Biden took the reins and moved forward with his own breathtaking spending spree. After enjoying a four-year vacation from the debt issue, Republicans have since comically returned to loudly preaching the virtues of fiscal discipline… while continuing to embrace the fiscally-ravaging Trump/Biden position that entitlements not be touched.
It’s insane, and the inevitable result of an increasingly unserious political environment, in which performance-art has replaced persuasion, tribal fear-mongering has eclipsed policy, and voters have become further detached from the realities of our nation’s most crucial challenges.
Such challenges can only be effectively met with political courage, but few in either party have any. In fact, the term has been largely redefined to fit partisan interests.
Democratic leaders tend to see courage in the government giving people more stuff… which doesn’t actually take courage, being that getting more stuff is largely popular with Americans.
Today’s Republican leaders tend to see courage in sticking their thumbs in the eyes of progressives and progressive sensibilities, or really any entity that doesn’t take their tribe’s side in the ever-evolving culture war. Many modern Republicans insist they’re “fighters”, but their supposed warrior instincts (beyond populist lip-service to the base) seem to be M.I.A.
Real political courage would be going out on a limb by proposing serious, thoughtful entitlement reform. It would also be an act of true patriotism. But the Republicans of yesteryear, who did just that, have largely been chased out of the party and public office (or driven into silence) by MAGA-era Republicans who ironically and tragically insist that the old brigade… well, lacked courage.
So now what? The only mathematically plausible alternative to reforming our dying entitlement programs (as our population continues to age and health-costs continue to rise) is to keep those programs on life-support through crippling tax-hikes on all classes of Americans.
This would assuredly have a devastating effect on the U.S. economy, and according to even the most charitable forecasts, such measures would only plug the holes for a while. Not to mention that those initiatives too may be politically unobtainable, being that both parties in recent years have campaigned heavily on protecting the middle class from tax hikes.
In other words, years of political cowardice have set our country up for an entirely predictable and avoidable fiscal catastrophe, which both parties will of course blame each other for once everything comes crashing down.
Hey, but at least the parties are focused like a laser on other extremely important stuff, right?
Let the good times roll.
Kicking the can down the road seems to have become a national pastime.
Actually doing something, but only when faced with an imminent disaster, is always someone else's problem.
It's a game of chicken. Those in the Republican Congress - well, most of them - know that, especially with tax cuts they favor, entitlements will have to be "reformed," i.e. cutback in some way, in order to balance the budget and to eventually start paying the national debts. That's why they refuse to say what cuts need to be made. They want the national Democrats to take the heat.
On the other hand, most in the Democratic Congress and the Biden Administration know that, even with workable tax increases on those making more than $400,000 a year, entitlements will have to be somehow curtailed in order to balance the budget and start paying the debts. Even if they take the President Clinton approach by matching tax increases on the wealthy with targeted budget cuts - some or most in the automatic increases in spending - AND raise the income cap on social security and Medicare withholdings, they only will be pushing back the day of reckoning. With the current demagogic climate and the current Congress, they could not get such a plan passed into law even if they wanted.
Years ago, in the waning GW Bush years or the early Obama years, a Congressional committee formed to address this issue. It concluded the obvious: we can’t tax our way to fiscal responsibility, and we can’t cut our way out. Long gone is the golden opportunity President Clinton handed to President GW Bush. Our fiscal problems are now more dire.
I don’t have a specific answer. But we’re going to have to be pragmatic, not moralistic. We need to find a workable solution. It has to be an all-sided approach. Targeted budget cuts will have to be made. In addition, maybe taxing social security payments for those above a certain income in addition to targeted tax increases on the wealthy. Another possibility is to enact a 1% national sales tax, perhaps exempting food - as I recall, a proposal Bill O'Reilly once favored. This would bring in tax revenues from those working under-the-table. These are just working ideas. We need to find a plan that works and go with it.
Those screaming “class warfare” and the battle tested “we’re picking winners and losers” are sticks-in- the-mud. Bernie is on record as saying that he opposes tax increases on the wealthy even if those tax increases will help to balance the budget, i.e. he’d rather see our nation default than enact tax increases on the wealthy. We have to face the fact that we're predominantly a consumer economy. Raising taxes on the middle class takes away from the economy.
Getting moralistic in this manner is a luxury we cannot afford. But to counter the forementioned war cries, the wealthy benefit disproportionately from a healthy economy. So, they should pay a disproportionate amount of taxes, especially to avert a fiscal crisis. We can heap praise on the wealthy, if that helps.
At some point, either we’ll either wake up and smell the coffee or our nation’s economy will slide into the toilet.