If the polls and the gamblers and the bookmakers are right, Donald Trump is going to be the Republican nominee for president. And if the polls and gamblers and the bookmakers are right, he is also now the favorite to become the next president.
Since whoever is sworn in next January is going to have to deal with the looming crisis at Social Security and Medicare, it raises the question: What will former and potentially future president Trump do about it?
I’ve reached out to his campaign, but so far I haven’t heard back.
Trump has been quick during this campaign to criticize rivals for suggesting they will do something to cut, or even restrain the growth of, Social Security and Medicare spending. Florida Gov. Ron DeSantis, Trump said, was a “wheelchair over the cliff kind of guy,” alluding to a famous—or infamous—2012 Democrat attack ad about small-government Republicans.
And Trump has repeatedly attacked Nikki Haley, his last remaining rival for the nomination, along the same lines.
“She wants to gut Social Security and Medicare and raise the retirement age by 10 years,” he told a crowd in South Carolina this week. Under Haley’s plans for Social Security, he said, “you’ve got another year to go, and then you learn it’s not a year, it’s 11 years…that’s what she wants to do.”
Actually, Haley hasn’t said that, or anything like it. As I’ve pointed out before, Haley’s proposals for these programs amount to milquetoast, and wouldn’t affect the retirement age of anyone over 30. But so what? What matters these days isn’t what’s factually correct, but what people believe. Anyway, politically, the point is probably moot.
As my late father used to say, it’s easier to be a first-class critic than a third-class musician. Or, as Teddy Roosevelt said, “it is not the critic who counts…but the man who is actually in the arena.”
So the question isn’t whether Donald Trump can criticize other people for coming up with ideas to help balance the books at Social Security and Medicare. Anyone can do that.
It’s whether Trump, currently the front-runner to become the Republican nominee — and maybe president — has a plan of his own.
If he is sworn in next January, presumably he’ll have a Republican Congress to work with. Trump’s second term will be scheduled to last until January 2029. What will he—and his Republican allies on Capitol Hill—do for Social Security and Medicare during that time?
The matter is pressing. By the time Trump would be scheduled to leave office, Social Security’s trust fund will be just four years away from insolvency. Medicare’s trust will be just two years away. Unless action is taken, the result would be a catastrophic collapse in benefits.
In other words, unless Trump and Congress can agree on a plan to rescue these two programs, retirees can expect exactly the doomsday scenario that the Trump campaign has been trying to pin on Haley: A 20% cut in Social Security checks, across the board, sparing neither those already retired or those nearing retirement.
The problem that too few people realize is that the crisis facing these two programs is part of the wider crisis facing the federal government. There aren’t separate crises facing “the deficit” and “entitlements.” They’re the same. The trust funds are just accounting fictions.
The latest news is grim. “The federal government faces an unsustainable long-term fiscal path,” Uncle Sam’s autonomous watchdog, the U.S. Government Accountability Office, warned just this week. National debt “will more than double over the next 30 years” as a share of the economy on current trends, it estimates. This “poses serious economic, security, and social challenges if not addressed,” it adds.
“The federal debt level is growing at a rate that threatens the vitality of our nation’s economy and the safety and well-being of the American people,” Gene Dodaro, the U.S. government’s Comptroller General and head of the GAO, said in a statement.
Most of the growth in government spending is coming from just three things, says Maya MacGuineas, the president of the nonpartisan Committee for a Responsible Federal Budget: Social Security, healthcare including Medicare, and interest on the debt. “Over the next 10 years the growth in interest, Social Security and healthcare is 85% of the spending growth,” she tells me.
It is shocking how fast we got here. In 2000, U.S. national debt was just $3.4 trillion, or about one-third of annual gross domestic product. Back then, the Congressional Budget Office reckoned it could be wiped out completely within a decade.
Today it’s $24 trillion, or nearly 100% of GDP, the GAO reports. That’s the highest level since World War II. On the current trajectory it will hit 200% of GDP by 2050.
The best that can be said is that the deficits over the next 10 years will be lower than expected last year, largely thanks to the booming jobs market, and to spending restraints agreed between President Biden and Congress.
What will Trump do? We know one thing: He will make these deficits even bigger. Trump promises that if elected he will extend his 2017 tax cuts, which are due to expire next year. And, he says, he will cut taxes even more. “I gave you the largest tax cuts in the history of our country,” he told South Carolinians this week. “I will make the Trump tax cuts permanent…and we will cut your taxes even more than that.” [See here, starting at 13 minutes and 30 seconds.]
MacGuineas tells me that the initial Trump tax cuts in 2017 added $2 trillion to the debt, and extending them will add another $3 trillion. That $3 trillion, by the way, would be on top of the deficit numbers that the CBO and the GAO are talking about.
Lower taxes are wonderful things in many ways, especially for anyone working for a living. But there’s a recurring myth that somehow tax cuts “pay for themselves.” Some people seem to think Ronald Reagan’s famous Laffer curve, which was about cutting punitive tax rates of 70%, 80% or 90%, is really just the Laffer Line, which would be about cutting any tax rates. The logical implication of this stupidity is that we could maximize revenues by cutting taxes to 0%. (Good luck with that.)
There’s a modern word for this kind of nonsense: “Cakeism.” As in: Wanting to have your cake and eat it. This applies to someone who says you don’t have to make any hard choices. They’ll cut your taxes and protect spending plans, even if the government is already deep in the hole. Magic! Oh, and have you heard about the wonderful new diet in which you can eat all the pizza, loaded nachos, and chocolate cake you want, and still lose weight?
Actually, the initial point of the Laffer curve is that there’s a happy medium, where tax rates are reasonable and revenues are high. Raising tax rates too high is as bad for government revenues as cutting them too low.
Whatever you make of Trump’s 2017 tax cuts, they did not help the debt. The federal government’s revenues, when adjusted for inflation, actually fell after they passed. (In 2020 they were lower, in real terms, than in 2016 or even 2017.)
That, incidentally, was also true of the 2001 Bush tax cuts that began our national road to fiscal doom. Adjusted for inflation, total federal tax revenues collapsed after these cuts—and were still down a decade later. The myth of the cost-free tax cut is just that—a myth.
Trump has floated some interesting ideas for generating government revenues, such as licensing more oil and gas drilling on federal land, and walloping imports from places like China with massive tariffs. (The latter, by the way, is an idea that once was supported by Democrats such as New York senator Chuck Schumer.)
The problem, as the CRFB points out, is that the numbers don’t add up. Even an optimistic view of Trump’s tariffs sees them raising maybe $2 trillion over the next 10 years—just two-thirds of the estimate simply of the cost of extending his 2017 tax cuts.
Not long ago, when I asked Trump’s campaign about his plans for Social Security and Medicare, they directed me to the website. There I found suggestions Trump would fill in the funding gaps by cutting international aid, deporting illegal immigrants, ending “left-wing gender programs” in the military, cutting “the billions being spent on climate extremism,” and cutting “waste, fraud, and abuse everywhere that we can find it.”
The funding gaps in the two programs are currently valued at $27 trillion—or about $130,000 for every working age American.
As Trump approaches the nomination of his party, and potentially re-election to the White House, he owes us a fuller explanation of what he plans to do—if anything.
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