“programs for the poor are only a tiny portion of the U.S. welfare state. In fact, the Congressional Budget Office estimates that more than 60 percent of American households receive more in government benefits than they pay in taxes. To get an idea of just how big the American welfare state has become, consider that those transfer payments from the federal government are equal to 34 percent of all wages and taxes in the U.S.”
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“The largest transfer programs are the middle-class entitlements, Social Security and Medicare. In addition, a large portion of the third biggest entitlement program, Medicaid, actually goes to the middle-class elderly and disabled individuals, not the poor. Those three programs alone now make up more than half of all federal spending.”
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“we need to understand that, in practice, when an individual pays Social Security taxes, none of those taxes are set aside for that individual’s benefits. Rather, they are used to pay benefits to those who are currently retired. Social Security is merely a transfer payment from workers to retirees. In that sense, it operates exactly the same as any other transfer or welfare program.”
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“Many individuals will receive more than taxes paid plus a reasonable amount of interest on those taxes.”
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“according to the Social Security system’s trustees, the program faces a future shortfall of more than $43 trillion7 (measured in discounted present value over an infinite horizon—that is, if the government put away $43 trillion today and earned 3 percent interest on those funds, it would have enough money so that, combined with payroll taxes, it could pay all future benefits). Unfortunately, however, the federal government doesn’t have an extra $43 trillion. As a result, there is simply no way that Social Security can pay future benefits without a massive tax increase.”
“Prominent conservative groups are refusing to criticize Republican lawmakers and President Donald Trump for the massive spending package, and polling shows fewer than 1 in 10 Republican voters disapprove of the measure’s passage.
That tells you something about the current state of the conservative movement. When the last Republican president signed the $700 billion Troubled Asset Relief Program (TARP), otherwise known as the 2008 bank bailout, polling from Gallup found that fewer than half of all Republicans supported it. When President Barack Obama signed the American Recovery and Reinvestment Act, the $833 billion stimulus passed in the wake of the last economic collapse, only about 30 percent of self-identified conservatives approved, Gallup found.
Now, we’re spending a whole lot more money with a whole lot less opposition.
As Reason Editor at Large Matt Welch put it last week: “There is no more politics of fiscal prudence in America, just a competition to see who can wag the biggest firehose.””
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“If fiscal conservatism still held any cache among Republican lawmakers, voters, and activists, there would have been an outcry about President Donald Trump and Republicans in Congress inflating the deficit to record highs over the past three years. It wasn’t all that long ago that grassroots conservatives were toasting the toppling of high-ranking Republicans for lesser slights.”
“Measured as a share of the entire U.S. economy, the national debt has doubled in just 12 years and is on pace to grow to historical highs within the next decade. The federal government’s budget deficit—the gap between how much revenue it raises and how much money it spends—is expected to exceed $1 trillion this year.”
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“Lawmakers from both major parties have worked together in recent years to pass budgets that exploded annual deficits and added to the debt. Democrats running for president are promising to hike federal spending by trillions of dollars to pay for free college, government-run health care, and the fight against climate change—and even though they are also promising to raise taxes, the math doesn’t add up. That means deficits will continue to grow. Meanwhile, President Donald Trump has abandoned any pretense of fiscal conservatism, and most of his party has followed suit.”
“Republicans have often criticized Democrats for their expensive policies and rallied behind spending cuts, but now that Trump is in the White House, many conservatives seem to have abandoned the idea entirely. Rush Limbaugh, the inflammatory right-wing radio host and recent recipient of the Presidential Medal of Freedom, regularly railed against former President Barack Obama for his reckless approach to fiscal issues. In July, he appeared to have changed his position.
“How many years have people tried to scare everybody about [the deficit]?” he said on his show. “Yet here we’re still here, and the great jaws of the deficit have not bitten off our heads and chewed them up and spit them out.””
“as doctors will tell you, administering vaccines to patients with weakened immune systems can be disastrous. Given the United States’ already perilous national debt and rising deficit, the White House and Congress should be cautious about spending additional money to avoid a coronavirus-caused recession—especially since the “vaccine” doesn’t seem like a sure bet.”
“during Trump’s first term, he displayed the same proclivity to jack up spending as his Republicans predecessors. The data shows that Trump increased defense spending in real terms by 18 percent, with an overall spending growth rate of 10 percent. Presidents Ronald Reagan and George W. Bush increased defense spending by 28 percent and 36 percent, respectively (and overall spending by 9 percent and 24 percent). Compared with their Republican counterparts, Democratic presidents Obama and Bill Clinton look frugal.
Unlike Bush or Reagan, however, Trump has had a booming economy, no new wars, and no terrorist attacks since his term began. This context makes the massive increase in spending, along with the $1 trillion deficit in fiscal year 2020, even more shocking. With no serious changes, the Congressional Budget Office projects that these annual budget deficits will stay well above $1 trillion in the next 10 years.
To be fair, the president does plan to balance the budget eventually—in 2035. To achieve this goal, Trump proposes some $4.4 trillion in savings over 10 years, which is a step in the right direction. For instance, according to Marc Goldwein at the Committee for a Responsible Federal Budget, this the budget would save Medicare $600 billion, reducing national health expenditures by almost $1 trillion. As Goldwein noted on Twitter, “That means lower premiums and out of pocket costs—don’t demagogue these policies!” Unfortunately, judging by the news headlines and reactions by Democrats in Congress, these savings are likely dead on arrival.
To achieve such savings, some very unrealistic assumptions would need to materialize. For instance, while the economy grew 2.4 percent in 2017, 2.9 percent in 2018 and 2.3 percent in 2019, the White House projects that the economy will grow at about 2.8 percent annually for a decade straight. The budget also counts on interest rates staying low, so as to not massively increase the amount of interest payments that will have to be made. The low interest rate, paired with the planned savings, would lower interest costs by $300 billion. Unfortunately, this is a mirage. According to the Committee for a Responsible Federal Budget, “Using more realistic economic assumptions, the budget deficit would be about $1.2 trillion (3.7 percent of GDP) in 2030,” as opposed to the $261 billion projected by the White House.”
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“The plan is to cut projected spending on domestic programs by roughly $2 trillion. These “cuts” are mostly to the projected growth of spending increases, not reductions in the actual amount of spending. Still, to make the savings politically viable, the burden should be distributed enough to inspire a sense of shared sacrifice. Instead, the budget plans to extend the 2017 tax cuts at a cost of $1.4 trillion and increases military spending, making the cuts harder to stomach for some.
At the end of the day, and after much spilled ink analyzing the budget proposal, we can count on one thing: This actual budget won’t see the light of day. Instead, Congress and the administration will continue in the footsteps of those who came before them and increase the debt while pretending to be fiscally responsible.”
“This fiscal year, 2020, the federal government will collect $3.6 trillion in tax revenues. But due to its spending addiction, the government will expend $4.6 trillion. This means that the government will have to borrow $1 trillion this year alone, in order to cover a deficit of 4.6 percent of GDP. This is the first trillion-dollar deficit not due to a global recession.”
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“Thankfully, the economy is doing well for now. This good performance is masking many of the ill effects, not just of the trade war but also of our overall fiscal situation. The reality, however, is that a growing economy during a time of peace should not be accompanied by growing deficits.”
““The four leading candidates would all spend money to expand coverage and they would all raise taxes to help cover the costs,” Committee for a Responsible Federal Budget senior vice president Marc Goldwein said in an interview Friday. “We estimate only one candidate would actually raise enough to assure their plan doesn’t add to the national debt.”
With the higher price tags come lower out-of-pocket costs for millions of Americans under the Warren and Sanders plans.”
“at the tail end of 2019, Congress repealed three significant components of Obamacare.
The three repealed provisions were all taxes, each of which was included in the initial legislation as a way of raising revenue to pay for the hundreds of billions in spending the law called for. By far the biggest of the three was the so-called Cadillac tax, which was expected to raise about $197 billion over the next decade. Congress also nixed the law’s health insurance tax, projected to raise $150 billion over 10 years, and the medical device tax, projected to raise $25.5 billion. All three taxes were eliminated as part of a $1.4 trillion year-end budget bill that President Trump signed at the last possible minute in order to keep the government open.”
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“The elimination of three health care taxes will increase the deficit by $373 billion.”
“After piling up trillions of dollars in deficit spending during the last recession, the federal government took some modest steps towards reducing that red ink during the middle years of the 2010s. But after Republicans took full control in 2017, spending skyrocketed and the deficit inflated again.
Since Trump was inaugurated, Washington has added $4.7 trillion to the national debt—almost entirely the result of a gigantic spending binge, but with a small assist from the 2017 tax cuts, which reduced revenues without offsetting spending cuts.”
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“”Debt threatens our economic health and hinders our ability to make important investments in our future. If we want to tackle big issues like climate change, student debt or national security, then we shouldn’t saddle ourselves with growing interest costs.””
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“Compare all this with early 2001, at the end of the second-longest economic expansion in history. The federal government was running a surplus. The national debt was falling and amounted to only 31 percent of GDP. That’s what you’d expect to see now, since deficits typically fall when the economy is growing and grow when the economy is rotten.
Indeed, since the end of World War II, the U.S. has seen deficits greater than 4 percent of GDP only in years when the country was either deep in the throes of a serious recession or emerging from one.”
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“If we’re running a trillion-dollar deficit in the good years, what happens when the next downturn occurs?”
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“The Trump administration and current crop of Republicans in Congress have made the problem worse than it already was. Some of them—like former deficit hawk Mick Mulvaney and former House Speaker Paul Ryan, who made his name in Congress as the GOP’s budget-maker—deserve special ignominy for abandoning their fiscal conservatism when it was most needed. Trump came into office promising to eliminate the national debt in eight years, and that’s even more of a joke now than it was then.
Meanwhile, Democrats’ aversion to spending reductions and their refusal even to consider changes to entitlement programs—the biggest driver of the national debt—are equally large obstacles to any meaningful attempt at fixing this mess. The party’s progressive wing is pushing for Medicare for All and expanding Social Security benefits, while elevating economic theories that say we should ignore the deficit.”