Tag Archives: entitlements

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The Looming Debt Ceiling Calamity: Mutual Self-Destruction

The Republicans and Democrats are playing a dangerous game with Americans. And they both know it. 

At his Feb. 7 State of the Union address President Biden got rare unanimity among Democrats and Republicans on one key issue: protecting Social Security and Medicare.

“Social Security and Medicare should be “completely off the table” when it comes to debt ceiling negotiations, said House Speaker Kevin McCarthy. In fact, McCarty said, Congress should be “strengthening” those programs.

The problem is if cuts to Medicare and Social Security are off the table, there’d have to be bruising cuts in other parts of the federal budget., something neither party is likely to accede to. 

Neither side wants to tackle the programs that are chewing up most of the federal budget. 

It used to be that Congress and the President had a lot of flexibility in setting the federal budget every year. The total pot wasn’t nearly as big as now, but most of it was subject to haggling. Not anymore.

Federal spending is divided into three broad categories: discretionary spending, mandatory spending, and net interest.

Mandatory spending is composed of budget outlays controlled by laws other than appropriation acts, including federal spending on entitlement programs. Entitlement programs such as Social Security, Medicare, and Medicaid make up the bulk of mandatory spending that’s on autopilot.. 

In FY1962, way back when I was a freshman in college, which was before the creation of Medicare and Medicaid, mandatory spending was less than 30% of all federal spending. 

By FY2016, mandatory spending had increased to about 63% of total federal spending, and in FY2021 it had grown to about 71% of total federal spending.  In other words, mandatory spending was slowly gobbling up most of the federal budget, leaving smaller and smaller shares subject to congressional negotiations. 

So now we have Republicans in the awkward position of insisting on deep spending cuts while leaving the two biggest drivers of federal spending untouched.

Members of the House Freedom Caucus, a group of GOP lawmakers have said  they want a near freeze on discretionary spending for 10 years, without raising taxes, cutting Social Security and Medicare costs or funding for veterans and defense, with a goal of balancing the budget in that period.

Without raising taxes, cutting Social Security and Medicare costs or funding for veterans and defense, Congress would need to cut 85% of spending in all other categories to balance the budget in 10 years, the Committee for a Responsible Federal Budget, a nonpartisan budget group, has concluded. 

Let’s get real. That’s not going to happen. 

So we’re all left twisting in the wind while our so-called public servants pontificate. They ought to be ashamed.

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Sock it to ’em: the left dreams of more taxes and more government

The left’s collective veneration of the state and readiness to surrender self- reliance to its generosity are becoming ever more evident as the presidential race accelerates.

After exhaustive research, the New York Times has concluded that if the federal government raised taxes on the wealthy it could generate a lot of money. You don’t say.

tax-cartoon

The Times also figured out that the potential amount of revenue the government could raise from the wealthy would depend on how much the government raised their taxes. That’s groundbreaking.

Not only that, The Times said, but the government could raise one hell of a lot of revenue from high earners “…while still allowing them to take home a majority of their income,” How very thoughtful.

The Times effused over the things the government could do with a ton of additional tax revenue, like eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed. The potential next step — student loan forgiveness?

With the base of the Democratic Party moving swiftly to the left, you can expect more of these “we can do it because the wealthy will pay for it” proposals.

In the end, the Times took 2085 words to conclude that the more you tax rich people, the more taxes the government will collect (assuming the well-off don’t figure out how to avoid paying the taxes) and the more the government can spend on all sorts of stuff.

What the Times didn’t do is address the question of whether it would be a good thing for the government to reap enormous revenue increases and vastly expand its penetration into our daily lives.

Do we really want a massive expansion of government that would be a successor to the New Deal and the Great Society?

When you invite the government to pay for more things, the government becomes your partner, or, more likely, your boss. Is that what Americans want?

When government gives you things, they always come with new federal rules and regulations accompanied by known and unknown costs. Is that the American dream?

The Times also didn’t address the growing fiscal problems we are already facing:

  • Federal spending still exceeds revenue by over 400 billion dollars a year
  • deficits are expected to resume growing
  • even with declines in discretionary spending imposed by sequestration, entitlements are expected to grow in the future.

“You wouldn’t know that we have an unsustainable fiscal path from the debate we’re having right now,” Rudy Penner, a former director of the Congressional Budget Office, told the Wall Street Journal.

A message to the left and the NY Times. Be careful what you wish for.

 

(P.S. – Yes, I know, you also have conservatives proclaiming how they want to cut taxes when we can’t even pay our bills now, but that’s another story)

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Disillusionment and despair: the Trump turmoil

Donald Trump isn’t a candidate.

Donald-Trump-Caricature

He’s a stand-in for the alienation and disillusionment so many Americans feel as both the Republican and Democratic parties have failed us.

How could it be otherwise when so much seems so wrong and fakery, misdirection, and outright lies by both parties have been so pervasive?

Consider:

  • The past several decades have seen the most sustained rise in inequality in the United States since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years.
  • The 2009 $830 billion stimulus package, with a claimed focus on shovel-ready projects, was supposed to fix things after the Great Recession. The legacy instead – a slow growth economy. The first 23 quarters of the recovery, which officially began in June of 2009, had an annual rate of growth of just 2.1 percent.
  • The distribution of wealth in the United States is even more unequal than that of income. The wealthiest 5 percent of American households held 54 percent of all wealth reported in 1989, rose to 61 percent in 2010 and reached 63 percent in 2013.
  • 71 percent of Americans say life has gotten worse for middle-class Americans over the past 10 years.
  • Today’s fifty-somethings may be part of the first generation in American history to experience a lifetime of downward mobility, in which at every stage of adult life, they have had less income and less net wealth than did people who were their age ten years before.
  • There is now less economic mobility in the United States than in Canada or much of Europe. A child born in the bottom one-fifth of incomes in the United States has only a 4 percent chance of rising to the top one-fifth.
  • Young Americans (ages 18-34) are earning less (adjusted for inflation) than their peers in 1980 ; the college graduating class this year left with an average student debt of $35,051.
  • In 1986, President Reagan signed legislation that was supposed to fix the illegal immigration issue once and for all. Three million applied for legal status and about 2.7 million received it. Today, about 11.7 million immigrants are living in the United States illegally. So much for the fix.
  • Despite all the “mission accomplished” and “victory is at hand” assurances, America has been at war in the Middle East for the past 15 years, with little to show for it, billions of dollars down a rathole, thousands of American soldiers dead and wounded, and continuing chaos in Afghanistan, Iraq, Libya and Yemen.
  • Despite the billions the government has spent on poverty-related programs, half of children age three and younger live in poverty.
  • The White House wants to “press the reset button” on one of Washington’s biggest challenges: its increasingly troublesome relationship with Russia,” Vice President Biden, 2/7/2009; “We’re going to hit the reset button and start fresh (with Russia),” Secretary of State Hillary Clinton, 3/6/2009
  • “If you like the plan you have, you can keep it.  If you like the doctor you have, you can keep your doctor, too.” President Obama, 6/6/2009.
  • “I ended the war in Iraq, as I promised. We are transitioning out of Afghanistan. We have gone after the terrorists who actually attacked us 9/11 and decimated al Qaeda.” President Obama, 9/14/2012
  • Despite assurances from some politicians that all’s well, the Medicare program has $28.1 trillion in unfunded liabilities over the next 75 years. Together with Social Security’s $13.3 trillion shortfall, the government has accumulated entitlement spending commitments that far exceed our capacity to pay for them.
  • In the 2012 election cycle, a tiny elite of the U.S. population, just 0.40 %, made a political contribution of more than $200, providing 63.5% of all individual contributions to federal candidates, PACs and Parties, according to the Center for Responsive Politics.
  • Fewer than four hundred families are responsible for almost half the money raised in the 2016 presidential campaign to date, a concentration of political donors that is unprecedented in the modern era.

As H.L. Mencken said, “Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule — and both commonly succeed, and are right.”