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Keep digging that hole

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.The Associated Press
Thursday, March 02, 2017 07:45 am

I nearly threw my hands up in despair last evening. Charles Krauthammer on Fox News actually advised Republicans not to be frugal as they're working up an Obamacare replacement:

What the Republicans have to do is to make sure there aren’t a huge number of people hurt by the transition, that’s the reason they are daunted. The Left has a genius for ratcheting up dependency and government largess, and then daring Republicans, when they come into power, into undoing it because it’s extremely unpopular.

I think what you have to do if you are a Republican, you have to forget about the bottom line, forget about deficits for the short run. You must cover these people one way or the other or you will have a PR, political catastrophe. Yes, you don’t want to bust the budget and there’ll be a transition period, but you can’t be counting your pennies now when there are going to be so many stories out there of people who are hurt and really hurting as a result of the reform.Oh, sure, what the hell, let's just run up the deficit in the "short run," and who needs to worry about that stupid bottom line? Then, in the long run, we can always come back and be serious about debt. Yeah, that'll work. Let's not count those silly pennies.

If this is what we're getting from one of the most articulate conservatives of the last 20 years, I suspect that the voice of fiscal restraint is going to be pretty much ignored in the Trump years, maybe even more than it has been for the past eight years. We're all going to become good little protectionist nationalists. At least in the Obama years (and to a certain extent in the Bush years, too) there were a few hardy conservatives shouting protests in the wilderness.

But we need that conservative outcry more than ever now. Republicans, on their good days, lean toward fiscal discipline, but in the absence of any persuasive arguments will lead harder toward the wishes of the party's leader.

As a proud member in good standing of the vast right-wing  conspiracy, I liked a lot of what heard in President Trump's speech to Congress this week. I like it that he is freezing federal hiring and cutting back on the regulatory state. It's terrific that he plans to overhaul and simplify taxes.

I especially appreciate it that he's going to strengthen the military, so it can better fulfill its constitutional duties,  and cut back on some elective domestic spending, which will help the federal government cut back on things that aren't in the Constitution. That won't get the federal government all the way back into balance, but it's a start.

The only thing is, however, that you can't make up for the amount of increase in the military with cuts in discretionary domestic spending. There just isn't enough there. In the FY 2015 budget, mandatory spending was about 65 percent of the budget, only about 29 percent. So just with his military/domestic spending plan alone, Trump will add to the debt. Then there is his proposal for $1 trillion in infrastructure spending. That Obamacare replacement Krauthammer is talking about. The plan to spend more on veterans. Affordable child care. A reinvigorated war on drugs. 

Donald Trump, in other words, has plans that will make Big Government even bigger. It is small comfort that Hillary Clinton would have been even worse.

There is only one place to go to get out of this hole, and it is the one place that Trump, so far, has said he will not go: a reform of entitlements — Social Security, Medicare and Medicaid — which are by far the biggest drivers of future debt. The gross U.S. debt, reminds Veronique de Rugy at Reason magazine,  is almost $20 trillion. The public portion of that debt, the money that the government owes to foreign and domestic investors, has reached $14.4 trillion and is growing fast due to the explosion of entitlement program. Furthermore:

Last year, spending on Medicare, Social Security, Medicaid, and net interest paid on the debt increased significantly. Together, they totaled $2.1 trillion and made up 56.6 percent of the budget. Medicare and Social Security spending was $1.6 trillion of the total. But this is just the beginning.

Now, we could look at Trump's promise not to touch these programs in a more cynical way. Could it be that when he promises not to reform Social Security and Medicare, he is actually promising massive cuts to Social Security down the road? As you may know, in 2035, when the Social Security Trust Funds runs out of assets, benefits will be cut across the board by roughly 25 percent. According to CBO projections, in 2035 the public debt will be $41 trillion, or 110 percent of GDP, while the deficit will be well above $2.6 trillion, or 7 percent of GDP. Meanwhile, spending will stand at almost $10 trillion, or 26 percent of GDP. In other words, the notion that Congress will be able to avoid the cuts one way or another is pure wishful thinking.

You know who should be leading the charge for entitlement reform?

1. Old geezers like me. Nobody would ever touch our benefits. It would be perceived as breaking the contract between citizen and government, the taking away of something that was promised and has bee (sort of) paid for, and it would be political suicide. So we have nothing to lose, and we could really contribute to the well-being of future generations. What's not to like.

2. Millennials. If something isn't done, they're the ones who stand to lose everything, or at least a lot of it, when the whole structure crashes and burns.

Paul Ryan, who has been one of the few politicians brave enough to talk about reform, is more optimistic than I think is warranted given all of Trump's campaign rhetoric:

In an interview with NBC’s Today show Tuesday, House Speaker Paul Ryan said he believes President Trump is on board with entitlement reform for future generations.

"You’ve been talking about this for a very long time," host Matt Lauer said. "It’s not popular, but you’ve said we’ve got to make tough choices on those entitlements. Can he balance this budget out without touching them?" Lauer asked, referring to the two big entitlement programs, Social Security and Medicare.

We’re not saying we’re going to change benefits for anyone in or near retirement," Ryan said, adding, "No one has ever proposed that." "What people like me have been saying is, for those of us in the younger generation, those of us who are X-gen on down, these programs will be bankrupt by the time we get there. We have to reform them for the next generation," he said.

We'll see.


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