If the polls, gamblers and bookmakers are right, Donald Trump will be the Republican presidential nominee. And if polls, gamblers and bookmakers are right, he’s now also the front-runner to become the next president.
Whoever is sworn in next January will have to deal with the looming crisis in Social Security and Medicare, so how will former President Trump, and potentially future presidents, respond to this crisis? Questions arise.
I have reached out to his camp but have not heard back so far.
During the campaign, President Trump has been quick to criticize his rivals for suggesting he would take steps to cut or slow the growth of Social Security and Medicare spending. President Trump said Florida Gov. Ron DeSantis was “a guy in a wheelchair on a cliff,” alluding to a famous and infamous 2012 Democratic attack ad against small-government Republicans.
And Trump has repeatedly attacked his last remaining rival in the nomination race, Nikki Haley, along the same lines.
“She wants to dismantle Social Security and Medicare and raise the retirement age by 10 years,” he told a crowd in South Carolina this week. He said Haley’s Social Security plan “allows her to have one more year and it turns out it’s not one year, it’s 11 years…that’s what she wants to do.”
Actually, Haley didn’t say anything like that. As I’ve pointed out previously, Ms. Haley’s proposals for these programs are milquetoast and would not affect the retirement age of people over 30. What matters these days is not what is factually correct, but what people believe. In any case, politically this point is probably indisputable.
As my late father used to say, it’s easier to be a first-rate critic than a third-rate musician. Or, as Teddy Roosevelt said, “It’s not the critics that count, it’s the people actually in the arena.”
So the question isn’t whether Donald Trump can criticize others who came up with ideas to balance Social Security and Medicare. Anyone can do it.
The question is whether Mr. Trump, now the Republican nominee and likely the front-runner to become president, has a plan of his own.
If he is sworn in next January, he will likely work with a Republican Congress. President Trump’s second term is scheduled to run until January 2029. In the meantime, what will he and his Republican allies on Capitol Hill do about Social Security and Medicare?
The problem is pressing. When President Trump plans to leave office, the Social Security Trust Fund will be in bankruptcy in just four years. We only have two years left of trust in Medicare. If action is not taken, the result will be a catastrophic collapse of benefits.
In other words, unless Trump and Congress can agree on a plan to rescue these two systems, retirees will expect exactly the doomsday scenario the Trump campaign was trying to pose to Haley: a across-the-board 20% cut in Social Security checks. It will be. We do not tolerate those who have already retired or those who are about to retire.
The problem that too few people realize is that the crisis facing these two programs is part of a broader crisis facing the federal government. “Deficits” and “rights” do not face separate crises. They are the same. Trust funds are just an accounting fiction.
The recent news is dark. Uncle Sam’s autonomous watchdog, the U.S. Government Accountability Office, warned this week that “the federal government faces an unsustainable long-term fiscal path.” Based on current trends, the report estimates that the national debt as a percentage of the economy will “more than double over the next 30 years.” It added that this “will pose serious economic, security and social challenges if left unaddressed.”
“Federal debt levels are increasing at a rate that threatens the vitality of our economy and the safety and well-being of the American people,” Gene Dodaro, the U.S. government’s comptroller and head of GAO, said in a statement.
Maya McGuineas, chair of the bipartisan Committee for a Responsible Federal Budget, says most of the growth in government spending comes from just three things: Social Security, health care, including Medicare, and interest on the debt. “Over the next 10 years, interest, Social Security and health care increases will account for her 85% of spending growth,” she told me.
It’s shocking how quickly we got here. In 2000, the U.S. national debt was just $3.4 trillion, equivalent to about one-third of its annual gross domestic product. At the time, the Congressional Budget Office estimated that the problem could disappear completely within 10 years.
Today, GAO reports, the amount is $24 trillion, or nearly 100% of GDP. This is the highest level since World War II. On the current trajectory, by 2050 he of GDP will reach 200%.
What we do know is that budget deficits over the next decade will be lower than last year’s projections, thanks to a booming job market and the spending restraints agreed to by President Biden and Congress.
What would Trump do? One thing we know: He will make this deficit even bigger. President Trump has promised to extend the 2017 tax cuts, which are set to expire next year, if elected. And then he says he’s going to cut taxes. “I delivered the largest tax cut in the history of our country,” he told South Carolinians this week. “I will make the Trump tax cuts permanent and cut your taxes even more.” [See here, starting at 13 minutes and 30 seconds.]
President Trump’s first tax cut in 2017 increased the debt by $2 trillion, and the extension would increase it by another $3 trillion, according to McGuineas.By the way, his $3 trillion is above About the deficit numbers that CBO and GAO are talking about.
Lower taxes are great in many ways, especially for people who work for a living. However, the common belief that tax cuts will somehow “pay for themselves” is repeated. Some people think that Ronald Reagan’s famous Laffer curve is about cutting. punitive A tax rate of 70%, 80%, or 90% is actually just a laffer line, which equates to a reduction. Any tax rate. The logical implication of this stupidity is that he can maximize revenue by cutting taxes to 0%. (Good luck then.)
The modern word for this kind of nonsense is “cakeism.” Example: I want to have my cake and eat it too. This is true for those who say they don’t have to make difficult choices. They will cut taxes and stick to spending plans, even if the government is already in trouble. magic! Oh, and have you heard about this amazing new diet that lets you eat as much pizza, lots of nachos, and chocolate cake as you want and still lose weight?
In fact, the initial point of the Laffer curve is a happy intermediate state where tax rates are reasonable and profits are high. Raising tax rates too much can be just as bad for government revenue as lowering them too much.
No matter what you think of President Trump’s 2017 tax cuts, they didn’t help debt. After adjusting for inflation, federal revenue actually fell after passage. (The 2020 numbers were lower in real terms than he was in 2016 or 2017.)
Incidentally, this was also true of the 2001 Bush tax cuts, which began the road to national fiscal ruin.After adjusting for inflation, total federal tax revenues collapsed after these cuts and still declined. 10 years later. The myth of costless tax cuts is just that: a myth.
President Trump has proposed some interesting ideas for generating government revenue, including expanding permits for oil and gas drilling on federal lands and surging imports from countries like China with huge tariffs. (Incidentally, the latter is an idea once supported by Democrats such as New York Sen. Chuck Schumer.)
The problem, as CRFB points out, is that the numbers don’t add up. An optimistic view of President Trump’s tariffs would probably raise $2 trillion over the next decade, which is simply two-thirds of the estimated cost of extending the 2017 tax cuts.
A while ago, when I asked the Trump campaign about their plans for Social Security and Medicare, they directed me to this website. So I’m surprised that President Trump has cut international aid, deported illegal immigrants, ended the military’s “leftist gender programs,” cut “billions of dollars spent on climate extremism,” and cut “waste, fraud, and fraud.” I found a proposal to fill the funding gap by reducing “acts”. Abuse is everywhere. ”
The funding gap between the two programs is currently valued at $27 trillion, which equates to about $130,000 for every working-age person in the United States.
As Mr. Trump approaches his party’s nomination and potentially re-election to the White House, he owes us more details on what, if anything, he plans to do.