This essay is a part of The Right Way Forward, Restoring America’s new think tank debate series in which leading conservative institutions argue the defining questions of the post-Trump era. Read about the series here.
The Marxist Leon Trotsky quipped during the Russian Civil War, “You may not be interested in war, but war is interested in you.” The same might be said today about the rising federal debt: While both parties do their best to ignore it, the federal government’s dire fiscal situation won’t be ignored much longer.
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This presents different challenges to each political party. For the Democrats, the problem is politics. If they can overcome Americans’ aversion to higher taxes, they will get the expansive welfare state they desire. But the Republican Party faces a more existential threat: The party’s newfound enthusiasm for elderly entitlement programs is mathematically incompatible with Republicans’ history as the party of low taxes and small government.
Consider Social Security. Since 2013, Rep. John Larson (D-CT) has sponsored the Social Security 2100 Act, which would restore Social Security to long-term solvency by raising the payroll tax rate and phasing out the $184,500 ceiling on earnings subject to the tax. By 2019, Social Security 2100 had co-sponsorship from 89% of House Democrats.
And yet Social Security 2100 never even got out of subcommittee, much less all the way to a vote of the House. Why? Because the Democratic leadership understood that massive tax increases are less popular with swing voters than they are with their core Members. President Biden, also attuned to moderates’ sentiments, sealed Social Security 2100’s fate when he came out against raising taxes on anyone earning less than $400,000.
THE RIGHT WAY FORWARD: THE ROLE OF THE STATE IN THE ECONOMY
Congressional Democrats know what they want to do on Social Security and the other entitlements — raise taxes, especially but not exclusively on the rich — but they also know that voters may not agree. This is a classic political problem that parties face all the time. But it may only be a matter of time before progressives get the high-tax, high-spending government they favor.
For Republicans, the problems go deeper.
In 2005, President George W. Bush favored fixing Social Security as much as possible by reducing the growth of future benefits. Centrist Democrats wanted a mix of tax increases and benefit cuts. Only the most progressive Democrats opposed any benefit reduction for anyone at any time.
Today, that’s the position held by President Donald Trump, who opposes any and all cuts to Social Security, even for the rich, and even in the future. In the 2026 State of the Union address, Trump seemingly went further, saying, “We will always protect Social Security, Medicare, Medicaid.”
Those are expensive promises to keep. And, with the Social Security and Medicare trust funds projected to go insolvent in 2032, the invoice is already on the way.
After the Social Security retirement trust fund runs dry, maintaining promised benefits would require the largest peacetime tax increase in U.S. history. Adding Medicare and Medicaid to the picture only adds to the bill. Even today, eliminating discretionary spending entirely, including zeroing out the defense department, would barely balance the federal budget. In future years, entitlements plus debt service will take up nearly the entire federal budget.
For Republicans, whose brand identity is built around low taxes, the repercussions would be even worse. Government’s ability to respond to needs as they arise, including for national defense, would be hamstrung. And the private sector would be weakened as resources are diverted from investment in research and technology to taxes and benefits. Mathematically, it is virtually impossible to maintain small government and low taxes without significant entitlement reforms.
And those reforms are possible without impoverishing America’s retirees, whose incomes are among the very highest in the world. Limiting entitlement benefits for higher-income seniors could go a long way toward reducing costs, without threatening the safety net for those who need it the most.
Democrats want bigger government, they are willing to impose the taxes to pay for it, and their only constraint is voters’ willingness to go along with it. But Republicans are sleepwalking into the end of the GOP as a low-tax, small-government political party.
Andrew G. Biggs is a senior fellow at the American Enterprise Institute
