During the debate over the tax cut, Democrats raised concerns that an estimated $1.5 trillion would be added to the national debt. If only they showed the same concern for the $82 trillion behemoth that is Social Security, Medicare and Medicaid. That’s the combined deficit for those three programs over the next thirty years.
Nudging taxes up and down will do little to stop what really ails the federal government. As Congressional Budget Office projections show, the government has a growing spending problem. Much of this new spending comes from the three entitlement programs. With baby boomers retiring in vast numbers, the number of beneficiaries for these programs rises sharply. The CBO calculated that the annual deficit will increase from 2.9 percent of GDP in 2017 to 9.8 percent in 2047, optimistically assuming a recession will never happen in this period — which usually leads to a collapse in tax revenue.
In a July testimony before Congress, then-Federal Reserve Chair Janet Yellen warned of an “unsustainable debt situation, with rising interest rates and declining investment” in the country.
Entitlement growth is a looming crisis that everyone knows about — yet everyone ignores. No one on the liberal side seems interested in making any radical fiscal reforms. Instead, they engage in demagoguery by attacking any conservatives who propose changes.
When Paul Ryan offered reforms to entitlements in his Path to Prosperity budget plan back in 2011, a liberal group called Agenda Project Action Fund launched an infamous attack ad in which a man portraying Ryan dumps an elderly woman off a cliff.
Republicans will fail in trying to fix broken American health care systemAfter spending the past seven years pledging to repeal and replace “Obamacare,” Republican representatives gave their first go at it this Read…
But with Republicans now in control of the White House and Congress, it’s conceivable that entitlement reforms might happen now, right?
Apparently not. In a betrayal to fiscal conservatives, the GOP-led Congress has decided to go on a spending spree. The budget plan raised deficits to $2.816 billion over the next ten years and received bipartisan support. There are boosts in spending for the military, border security, infrastructure and combating opioids. It sounds nice to give everyone what they want, but while bipartisanship won — Americans lost. The U.S. will not remain financially solvent if it continues to borrow with no end in sight.
When Ryan did bring up entitlement reform this year, he was immediately shut down by Senate Majority Leader Mitch McConnell. Fiscal conservatism was not his concern, nor the president’s. Part of Trump’s populist message was to defend entitlement programs like Social Security, Medicare and Medicaid.
There have been many conservatives who’ve advocated for entitlement reforms in the past. House Speaker Newt Gingrich proposed changes in the 1990s. Mitt Romney talked about entitlement reforms when he ran for president. With Trump giving the programs a shield, those necessary changes are unlikely to take place during his presidency.
What one businessman has called “the most predictable economic crisis in history” continues on unabated. America’s largest entitlement overhaul occurred in 1935 with the Social Security Act. A product of President Franklin D. Roosevelt’s New Deal, Social Security consists of social welfare and social insurance programs funded by payroll taxes. To put it simply, it taxes and it redistributes. — you pay as you go.
UW economics professor discusses future of health insurance reformAs a part of the Wisconsin Union Directorate Distinguished Lecture Series, University of Wisconsin economics professor David Johnson spoke Thursday Read…
Social Security has a demographical problem. After World War II came the Baby Boom — an explosion in the U.S. fertility rate. The large Baby Boomer generation was followed by the much smaller Generation X, and while the fertility rate rebounded somewhat for us Millennials, it has never returned to the heights of the Baby Boom.
Life expectancy is another factor in the Social Security, Medicare and Medicaid dilemma. In 1935, life expectancy was 59.9 for males and 63.9 for females. The financial burden at the time did not seem so great. In 2015, life expectancy was 76.3 for males and 81.2 for females.
The number of workers who funded the retirees decreased precipitously, from 41.9 workers supporting one retiree in 1945 to 2.9 supporting one in 2010. This sharp decline in workers risks an increase in taxes — unless something is done.
This crisis cannot go on. Whether the politicians want it or not, they’re going to need to make changes. Swelling deficits are not sustainable. Federal health spending and Social Security made up 53 percent of the federal outlays in 2016. By 2027, it is estimated that they will be 59 percent. This places pressure on other programs that conservatives and liberals both care for, like the military and infrastructure. Political leaders on both sides need to get their act together and save the U.S. from fiscal collapse.
John Graber ([email protected]) is a senior majoring in history and political science.