Guest Opinion: Biden’s budget consensus can’t last
Published 7:59 am Monday, February 27, 2023
By John Hood
Newly elected U.S. Rep. Chuck Edwards of North Carolina’s 11th District attended his first State of the Union address and joined his fellow Republicans in calling out Joe Biden’s fiscal irresponsibility.
“We have a looming debt and deficit crisis with serious implications for our national security and fiscal sovereignty,” Edwards observed. “Inflation is hurting Western North Carolinians from the grocery store to the gas pump. Yet the Biden White House continues its unchecked spending spree with American taxpayers’ hard-earned money.”
Democrats in the state’s delegation showered the president with praise. “In just two years, President Biden has brought our country together to lift us out of a pandemic, rebuild our economy, and ensure that no American is left behind,” said U.S. Rep. Deborah Ross, adding that “if we set our differences aside and commit to the hard work of finding common ground, we can address the issues that matter most to the American people.”
There was, in fact, a moment of bipartisan consensus during the president’s address. When Biden accused GOP members of demanding Social Security and Medicare cuts as a condition for raising the federal debt ceiling, several heckled him about it. Departing from the script, Biden responded by asking Republicans to applaud, and later to stand, to confirm they didn’t support cuts to the country’s two largest entitlements. Most complied.
“All right, we got unanimity!” Biden said. That’s the bad news. The good news is that they don’t actually mean it, at least not for the long term.
While both parties have good political reasons to exclude the programs from the coming debt-ceiling negotiations, the vast majority of members of both parties know full well it’s not possible to bring federal spending in line with federal revenue without doing something to slow the growth of Social Security, Medicare, Medicaid, and other entitlements. These programs already comprise most of the budget and are growing more rapidly than other federal expenditures as our population ages.
Yes, there are other places to find budget savings. And policymakers could raise revenue. But unless they want to essentially gut everything except entitlements for the elderly, or raise taxes to economically ruinous heights, they cannot hope to balance the budget, or even to keep federal debt from exploding, if Social Security and Medicare are off the table.
As Manhattan Institute budget analyst Brian Reidl pointed out, the baseline federal budget projects $15.7 trillion in deficits over the next decade. If progressives got their entire revenue wish list — income tax rates above 50% for middle-income families and 70% for the wealthy, an uncapped payroll tax, stiff taxes on capital gains and corporate income, even Bernie Sanders’ proposed wealth tax — that would produce only $10.7 trillion in revenue under the rosiest of scenarios.
When it comes to budget debates, knowledge is power. A great way to expand yours is to go visit the Debt Fixer site from the Committee for a Responsible Federal Budget. Through a series of checkboxes, you can devise your own plan for bringing the federal debt below 90% of gross domestic product by 2033. In my version, I selected trillions of dollars in savings across a range of non-entitlement programs, including defense, and even axed more than a trillion dollars in tax breaks without offsetting them with rate reductions (which would normally be my preference).
That still wasn’t enough. To reach the goal, I needed to reduce Social Security benefits for wealthy enrollees, charge them more for Medicare, raise the retirement age, slow annual benefit growth, and convert Medicaid into block grants with caps on annual spending growth.
Try the Debt Fixer yourself. Your solution may be markedly different from mine. Perhaps you will raise taxes more or control spending less. But I think you’ll find it impossible to complete the task without touching entitlements.
Our representatives in Washington know all this — or at least their staffers do. Something must be done. It just won’t be done this year.
John Hood is a John Locke Foundation board member. His latest books, Mountain Folk and Forest Folk, combine epic fantasy with early American history (FolkloreCycle.com).