Social Security and Medicare are so popular they are commonly known as the “third rail” of politics. Any politician who touches them gets a nasty shock. The politically smart thing for decades has been to periodically increase benefits and not worry too much about adequately funding these supposedly self-sufficient programs
Congress designates SS/Medicare as non-discretionary spending, which allows even fiscal conservatives to earnestly explain that Congress is unable to touch them, not even to reduce the benefit increases they themselves bestowed in the past. Of course, this is ridiculous since Congress could legally eliminate the programs if it chose to do so (not recommended).
As the population has aged and birth rates have fallen, SS/Medicare have descended into serious financial distress. This year, the programs will spend $69 billion more than they take in. The programs’ trustees recently moved the date for expected insolvency up to 2031 for Medicare, 2034 for Social Security.
Yet there is little acknowledgment from the political class that a problem exists. To acknowledge it creates a mandate for making highly unpopular choices. Even Donald Trump, the would be “conservative” leader, has decreed that no part of making America great again will involve touching our major entitlements. The endless quest for re-election continues to dominate decision making in Washington.
Even beyond entitlements, America has a spending problem. The federal government spends about 25% of GDP but only takes in revenues of 19%. The rest is charged off to future generations. With interest rates returning to normal levels, federal debt service will soon exceed $1 trillion a year, roughly what we spend to defend our country.
Why do we continue to spend so recklessly in times of peace and prosperity? It’s partly our perverse politics, where spenders dare opponents to suggest fiscal reforms and then rip them for bringing it up.
It’s also a mindset. Not long ago, families were considered the primary caregivers for each other. It was contemptible to neglect your own.
Americans today believe they are entitled to have government assume what were formerly family duties. Politicians gain millions of grateful dependents and family structure suffers, but there’s no going back.
Federal decision-makers have adopted an all-purpose solution to the problems that plague us: throw dollars at it. Schools failing? Send money. Semiconductor industry struggling? More money. People still living in poverty? Appropriate even more money. Money papers over our problems but affords no actual solutions.
Nobody even talks about the monetary implications of our ongoing border crisis. Over seven million mostly unskilled illegal immigrants breached our borders. Immediately upon successfully registering their fraudulent asylum claims, they expect food, shelter, medical care, transportation, eventually education, and social services all without a thought of paying for them.
The direct and indirect costs are incalculable, but California already reports annual direct expenses of $21.76 billion while Texas pays $8.8 billion and Arizona $3.2 billion.
Yet Democrats contend only more money can solve the problem. Biden and border czar Kamala Harris claim Republicans are responsible for the border mess because they once blocked further spending increases, even though the money goes to accommodate more illegal immigration. It’s time to end this massive farce and lawfully control the border. Democrats will have to find some less costly way to recruit future voters.
Our response to the COVID epidemic was another giant boondoggle. There wasn’t much to do about the virus. Protect the vulnerable, treat the ill, develop a vaccine, and allow it to run its course.
Instead, we embraced an orgy of spending. Trillions went to infrastructure improvements, solar energy, daycare, schools, businesses, and even individuals, all inexplicably in the name of COVID. It didn’t affect the course of the disease, but our descendants will pay for this spree far into the future.
It gets worse. In 2025, the spending caps on Obamacare and other discretionary items are set to expire as are the low interest bonds the government issued when money was cheap. There will be tremendous pressure to spend yet more just to maintain the spending status quo.
Thomas Jefferson, 250 years ago, extolled the benefits of a “wise and frugal” government. We didn’t listen. We will soon wish we had.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
On September 19, I testified before a House subcommittee on the impacts of Bidenomics – yet it was clear that half the committee members weren’t even listening. That’s disturbing because our lawmakers have played a huge role in making the typical American family about $7,000 poorer in just two and a half years.
Instead of acknowledging the data I presented, the Democrats on the subcommittee only regurgitated their talking points and resorted to espousing falsehoods about the state of the economy. Even if half our leaders won’t listen to the facts, hopefully the American people will, so here’s the truth about Bidenomics.
Under President Joe Biden, the government has spent, borrowed, and created trillions of dollars, and that caused the highest inflation in four decades. This inflation is a real tax on the American people because it transfers wealth from the people to the government. And the size of that transfer has been staggering.
The average American worker today loses more of his hourly earnings through the hidden tax of inflation than in federal income taxes. That means inflation under Mr. Biden has effectively doubled the average American’s federal income tax liability. Nominal pay keeps going up, but real (inflation-adjusted) pay has gone down.
The typical American family with two parents working and with average weekly earnings has seen their weekly pay increase $230 under Biden, but those larger paychecks buy about $100 less. The result is an annual decrease in purchasing power of about $5,100.
Similarly, net household wealth is at a record high today, but only before adjusting for inflation. In real terms, net household wealth is roughly flat since the end of 2020. That means nearly all the trillions of dollars in additional net household wealth have been confiscated by the government under this president through the hidden tax of inflation.
That’s how the government has been financing its massive deficits for the last three years.
To combat the inflation that it helped cause, the Federal Reserve has increased interest rates which have compounded the pain for Americans. Borrowing costs have risen dramatically and are now about $1,800 higher annually for the typical American family. Coupled with their loss in purchasing power, this leaves a family about $7,000 poorer than when Mr. Biden took office.
Yet many people are even worse off than that. If you’re trying to buy a home today, the monthly mortgage payment on a median price home has more than doubled under Mr. Biden. Homeownership affordability is at one of its lowest levels on record, and less than half of American households can qualify for a mortgage. And many who qualify still can’t afford the payments.
The impact of Bidenomics on federal finances has been just as bad, with interest on the federal debt rising at the fastest pace on record. In less than a decade, interest payments will crowd out more than half of existing government spending.
While the Democrats on the subcommittee refused to listen to any facts I presented, nothing I said was about politics, but policy. President Bill Clinton, a Democrat, signed welfare reform and multiple balanced budgets. And the 12 years of low inflation that preceded Mr. Biden were overseen by both a Republican and a Democrat.
The laws of supply and demand are purely apolitical, with both Democrats and Republicans being subjected to them. The sooner today’s Democrats—and some Republicans—realize this, the sooner they can acknowledge the factual outcomes of Bidenomics and hopefully change course.
But if the conduct of the Democrats on the subcommittee before which I testified is any indication, we shouldn’t hold our breath.
E.J. Antoni is a contributor to The Daily Caller News Foundation, a public finance economist at The Heritage Foundation, and a senior fellow at Committee to Unleash Prosperity.
“The Department of Education shall terminate on December 31, 2023.” If you’ve read this far, you have completed HR899, introduced by Rep. Thomas Massie.
Abolishing the DOE isn’t a new idea. The department was created in 1979 by the Carter administration, fulfilling a campaign promise to the NEA, the teachers’ union, which in turn gave him their first ever presidential endorsement.
But skepticism over the department was present even at its inception. The bill passed by just four votes in a heavily Democratic House. Ronald Reagan, always concerned about over-centralized power, immediately campaigned to unwind it. Several Republican education leaders since have endorsed its elimination.
1979 hardly marked the beginning of a glorious new age for American education. Per pupil spending on education since then has more than tripled, inflation adjusted, but there is little to show for it.
Achievement scores have been stagnant and still lag many of our peer nations in the developed world. The racial gap in academic achievement persists in spite of the department’s high-profile efforts. The bureaucrats and interest groups receiving the funding are fine with it, of course, but for the rest of us, it hasn’t accomplished much.
The DOE isn’t really designed to make an impact. It doesn’t establish or approve a curriculum. It doesn’t operate one school or educate one student. It doesn’t administer or create tests. It doesn’t establish standards for colleges and universities. We wouldn’t want it to do any of those things, but it naturally raises the question: is the DOE needed at all?
The department has over 4,000 employees who do research and write policy papers on education that are read mostly by each other. They administer the beleaguered student loan program and federal aid for education. Over 500 workers toil in the Office of Civil Rights.
Senator Joni Ernst notes that 94% of the DOE‘s staff were deemed nonessential during a government shut down. As one official summarized, “it really is just a grant making entity with a huge bureaucracy.”
Americans rightly respect the importance of education and are apprehensive about failing to support anything labeled “education.” The department doesn’t stir public animosity like Justice, Homeland Security, and other cabinet departments often do.
J. Luke Wood, president of Sacramento State University and a former professor of education at San Diego State University, asserts the attempt to eliminate the DOE has nothing to do with federalism or any legitimate substantive argument. No, the real motivation is…racism!
Yes, those darn Republicans are at it again, advancing unrelated pseudo-arguments to provide cover for their race hatred. They are engaging in “racelighting” i.e., racial gaslighting which is an “act of psychological manipulation where people of color receive racial messages which distort the realities and lead them to second-guess themselves.”
Opponents claim HR899 is just an attempt to shape curricula that teach a “fairy tale” history, omitting the ills of slavery as well as ignoring Jim Crow, miscegenation, and redlining. Furthermore, they say it is purposely intended to strip civil rights protections for minority students.
Yikes! Just being around Republicans, you would never imagine that they are such over-the-top bigots. Then again, maybe it is Professor Wood and his ilk who are the racial dividers, seeing racism as the explanation for nearly everything.
If they are so concerned about the civil rights of minority students, why not embrace school choice and charter schools? These reforms have demonstrated their capability to actually improve educational outcomes and lift children out of poverty.
Some see HR899 as a quixotic endeavor. Maybe it is. Bureaucracies, whatever their failings, are skilled, aggressive, and usually successful at defending themselves.
But there is one overarching reason why the DOE needs to go. We can’t afford it.
America is in big trouble financially. We have normalized intergenerational fiscal theft to finance so much wasteful, politically motivated spending that we are now $32 trillion underwater. Interest on the debt is crowding out other priorities and $50 trillion is in view. Still the Biden administration, with an election looming, continues to propose yet more new spending programs.
Instead, we should be desperately seeking out nonessential expenditures that could be cut without any significant harm. The Department of Education is an ideal place to start.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
Joe Biden is facing a moral dilemma. Does he embrace politically unpopular reforms to Social Security and Medicare that will ensure their survival for future generations? Or does he, for short-term political gain, aggressively block any changes to these iconic retirement programs?
Democrats have worked hard and successfully to make Medicare and Social Security the “third rail” of American politics. Medicare and Social Security reform now have such a stink about them that Republican lawmakers shouted their outrage at allegations that they were threatening Social Security in President Biden’s State of the Union address.
The only current proposal, by Florida Sen. Rick Scott, would merely require periodically reviewing Social Security and other major programs to assure that they are functioning as intended…which happens to be virtually identical to a proposal advanced in 1975, and again in 1990, by a senator with the same name as the current president.
Demagogues on the left learned long ago that many seniors could be freaked out by baseless charges that “they’re trying to take away your Social Security” or “drive grandma over the cliff.”
Biden’s allegations that many Republicans “dream” of eliminating Social Security are deliberate lies. C’mon, man. We need to have an urgent, focused debate over Social Security and Medicare reform, but Biden has so toxified the issue that politicians seem frozen in place.
But there are reasons why we can’t allow these entitlements to be ruled out-of-bounds for serious debate and improvement. Social Security is a broken, outdated program that by 2034 will be unable to pay its promises. Medicare, according to its own trustees, will be insolvent by 2028.
The assumption has been that these programs, upon which so many seniors depend, will never be endangered. General tax revenues will come to the rescue. But the general fund is close to being tapped out.
America is an unbelievable $31 trillion in debt. Interest payments will soon exceed $1 trillion annually. We are already having trouble financing the basic functions of government, like the national defense.
Even the strongest line of credit in the world can be depleted eventually. If America goes bust, the chance to embrace the painful but necessary solutions available now will be gone.
The answer lies in understanding our history. Social Security was designed as a safety net for those who outlived their earning years. It was a government-administered insurance trust that all paid into to provide retirement income for those who needed it. Insurance 101.
But there was a fatal flaw in the program’s design. They neglected to protect it from the Swamp. The funds supposedly being held in trust were stolen (“borrowed”) so that government programs could grow without the inconvenience of raising taxes.
With nothing left in the trust fund for retirement benefits, Social Security was turned into a Ponzi scheme, where every dollar paid in went immediately out the door to fund current benefits. Like all Ponzi schemes, this one worked for a while.
In 1950, there were 16 workers to fund every retiree. Now there are less than three. By 2030, every Social Security recipient will be supported by just two workers.
We did our seniors no favor by forcing them to contribute to a “retirement fund” that was actually just another welfare program, thus depriving them of the substantial benefits of compound interest. Yet now Biden wants to pose as their champion.
“Let’s all agree to stand up for seniors,” he recently urged. Yet his brave agenda was to do…nothing. (This happens to also be the position of Donald Trump, another leader not there when most needed.)
Forget reform. All Social Security recipients recently got an unfunded benefit spike. Many Democrats want to put everyone on Medicare, the equivalent of loading more passengers onto a sinking ship. Brilliant!
This insanity must stop. In fact, it will stop because it’s unsustainable. There’s just the question of how much more misery we want to inflict on those who will inherit this hot mess.
There are plenty of promising solutions out there, which urgently need to be vetted and discussed. All roads to a prosperous future for America lead through Medicare and Social Security reform.
The worst option is to listen to President Biden and ignore the portents of disaster.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
America’s political class can no longer put off the inevitable. They soon will have to pay for their insanely reckless fiscal practices.
It’s not going to be pretty. America’s debt has reached an appalling $31 trillion. Annual interest payments will exceed $1 trillion this year. Debt service is well on its way to crowding out other priorities, a trend which will only accelerate.
Unfortunately, a steep rise in interest rates occurred near the end of the biggest spending binge ever. Economists are warning we are nearing the dreaded “doom loop” in which interest costs can be covered only by more borrowing which further drives up interest expense, creating a vicious cycle.
There is a weird, almost preternatural calm about our dire fiscal future during this campaign season. We’ve seen much consternation about inflation, public safety, the border, and other critical issues. Yet politicians and the media hardly mentioned the debt crisis, so the public seems to assume everything is under control.
It isn’t, not by a long shot. Uncle Sam issued $7 trillion in new debt to finance the recovery from the COVID pandemic and our panicked overreaction to the disease. It’s too bad we can’t take back that $7 trillion.
Much of it was stolen by fraud and bureaucratic bumbling. Funds went to school districts, that haven’t spent them so far, to finance the indolence of those who preferred not to work and to Democrat pet projects like “climate change.” Millions of voters in no distress whatsoever got checks, as did some illegal immigrants.
Many economists predicted that injecting that much cash into the economy would cause inflation, especially since supply was limited by weakness in the labor market, fuel shortages, and supply chain problems. They were mostly ignored but turned out to be absolutely correct. After decades of relative price stability, we are now experiencing 8% inflation with no end in sight.
Millions of non-economists are experiencing what that does to your standard of living. Suddenly, food, fuel, and shelter have become existential concerns to millions of Americans, and the economic future looks dim.
Inflation also increases government spending. Social Security benefits are inflation-adjusted, resulting in an 8%, $100 billion increase. Total government healthcare costs will grow from $710 billion last year to $915 billion.
Financial markets cannot ignore the cloud of government debt hanging over our economy. A serious recession will almost certainly soon be upon us. Already, declining stock and bond values over the past nine months assure a steep decline in capital gains tax revenue, another contributing factor to the deficit.
The Federal Reserve board is doing the only thing it can to address inflation, which is to raise core interest rates. That also directly adds to the national deficit, increasing the interest cost and driving up the balance, since no other source of funds is available.
So, to summarize, unnecessary COVID-related spending of $7 trillion has combined with chronic overspending, which caused inflation, which increased borrowing costs, which drove up the deficit, thus precipitating a recession which will deprive the government of revenues to pay down the surging debt load. Way to go, guys.
The principle response of the Biden administration has been denial. Our president claims the economy is thriving. A monthly .1% drop in the inflation rate was the pretext for claiming inflation was in decline. The national debt is never mentioned, nor are the untold trillions in future promises we have made to senior citizens and others.
Instead, Biden issued a probably unconstitutional executive order “canceling” unpaid college loans – i.e., transferring the liability to taxpayers. It was terrible public policy, penalizing those who had behaved responsibly and incentivizing student indebtedness in the future. It spent yet more money in a desperate attempt to bribe some votes for the midterm elections.
Yet there seems to be little taxpayer resentment. Why should they care? Their taxes aren’t going to increase. The obligation will be added to the great river of debt passed on to future generations—you know, those little people who don’t vote yet.
They will inherit an America feeble and impoverished, that will have forfeited its greatness because of our greed and selfishness. STOP THE SPENDING!
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
