dChan - Q Origins Project Archive

Only cutting entitlements can halt our impending debt crisis

The U.S. cannot fix its debt problem by taxing the rich, or cutting defense spending, nor through the magical trickery of Modern Monetary Theory. And both political parties refuse to admit this cold, hard truth: only slashing entitlements can save the country.

I keep running into this sort of nonsense on Twitter, '''(PIC RELATED) so I figured it's worth unpacking and explaining the need to reform entitlements.

At this moment, our national debt clocks in at $22 trillion, and our annual deficit has just passed the $1.1 trillion mark. Given the power of the U.S. dollar, our national credit rating, and our steady economic growth — though our GDP may have absorbed some asset bubbles and we're overdue for a recession — it's possible that we could sustain this for some time. But the real issue is our total projected spending.

Our roughly $600 billion annual defense budget comprises just above 3% of GDP. That's projected to fall in the next few years as our economy grows. While we can always cut more waste and inefficiencies from our defense spending, the fact remains that it's a mere fraction of our nearly $4 trillion annual federal budget. The real financial risks in the coming years are our entitlement spending and the net interest it incurs.

The Congressional Budget Office projects that Social Security spending will rise from 4.9% of GDP in 2014 to 5.6% in 2024, and federal healthcare spending, including Medicare and Medicaid, will rise from 4.8% of GDP to 6.1%. But the true danger comes in the next two decades, when Social Security becomes insolvent (by 2035) and Medicare, the overwhelming majority of federal healthcare spending, goes bust just one year after that. By next year, Social Security will pay out more than it accrues in revenue. Social Security and Medicare will drive a whopping 90% of our rising deficit in the next decade.

Some people are willing to argue that we can just steal the assets of every member of the much-reviled 1% and throw them into the Gulag. That would provide the government with $40 trillion, right? That would be enough to cover our national debt twice over — well, if you're willing to ignore the capital flight that would result if this ever became a realistic possibility.

Furthermore, even if we could just expropriate and imprison the top 1%, it won't help if we adopt the progressive pet projects coming down the pike, from the Green New Deal (valued at $93 trillion in its first decade) to free college (conservatively valued at half a trillion dollars in its first decade). Even the most radical of the Democrats' proposed taxes won't come close to funding our national deficit over the next 30 years. The plan which would accrue the most revenue is the wealth tax from Sen. Elizabeth Warren, D-Mass., and even that would only collect $2.75 trillion over ten years.

The math is overwhelmingly clear: the only way to halt our exploding national deficit and projected debt is to cut entitlements, which in turn, would slow the increase in our national interest debt. Slashing our stagnant and insignificant defense spending and taxing the rich won't cut it.

Republicans and Democrats alike are to blame. President George W. Bush attempted to slow Social Security spending, only to face widespread condemnation, but he also passed Medicare Part D, which adds hundreds of billions of dollars to our debt every decade. And President Trump defied decades of Republican orthodoxy and lies about budget hawkishness, pledging not to touch entitlements. Given the recent Republican embrace paid parental leave as an additional cost to the Social Security program, its clear that budget hawks are a dying breed on the right.

Democrats are even worse, calling to replace our entire private health insurance industry with soon-to-be insolvent Medicare, nationalizing one-fifth of our economy with a program that cannot pay for itself. Plus they want an average 2% expansion of Social Security across the board with no real promise of how to fund it.

Ardent socialists believe that Modern Monetary Theory can fund all of this. Yet its assumptions about the dollar's resilience only apply when the economy is robust. If the economy grinds to a halt as a result of dumb ideas like wealth taxes and Green New Deals, then any extra cash minted by the government would merely contribute to stagflation.

Nothing will be able to save us then — although at least then we will be forced to deal with entitlement spending.

https://www.washingtonexaminer.com/opinion/only-cutting-entitlements-can-halt-our-impending-debt-crisis