The math isn’t complicated. If the federal government doesn’t reform entitlements soon, the country will face a debt crisis. There is no disputing this. It’s inevitable. The only unknown is timing. And the stubborn determination of some leaders in both political parties to ignore runaway entitlement growth—the most urgent domestic challenge facing the United States—means the crisis will come sooner rather than later.
According to the Congressional Budget Office, in 2008 federal debt was 39 percent of the U.S. gross domestic product (GDP). In the summer of 2016, it was 75 percent of GDP. Without changes, it’s projected to be 86 percent of GDP in 2026, and 20 years after that, in 2046, it will be 141 percent of GDP—an all-time high. That is a disastrous trajectory with potentially devastating consequences. In the anodyne jargon of the CBO: “The prospect of such a large debt poses substantial risks for the nation and presents policymakers with significant challenges.”
The Heritage Foundation frames the issue in a slightly more colorful way:
Twenty years. We will be there before a child born this week can legally have his first beer. Without changes, every penny of taxes collected by the federal government will fund entitlements, the drivers of our debt, and the interest on the debt driven by entitlements. No money for national defense. Not a cent for safeguarding our nuclear stockpile or energy research. Nothing for infrastructure, welfare for the truly needy, unemployment for those displaced in the changing economy.
External factors could slow slightly the spinning of the debt clock numbers (strong economic growth) or speed it up (higher interest rates). But there is nothing at all under serious consideration in Republican-run Washington to reverse them.
President Donald Trump mentioned debt only once in his speech to a joint session of Congress last week—and then only to blame Barack Obama for failing to take the challenge seriously. While Trump has suggested that he favors some cuts in discretionary domestic programs and insignificant line-items like foreign aid (roughly 1 percent of the federal budget), he has consistently opposed reforms to the entitlement programs at the heart of the problem, once predicting that even proposing reforms would be “political suicide.”
Trump’s view reflected the conventional wisdom. It is wrong.
In an act of political courage exceedingly rare in today’s Washington, Paul Ryan decided to challenge those assumptions and proposed making entitlement reform a central component of official Republican budgets. He set up small-group tutorials to educate House Republicans about the gravity of the situation and persuade them to embrace reforms to Medicare and Medi-caid, changes that would not affect current beneficiaries but would make the programs sustainable over the long-term. Ryan prevailed, despite initial opposition from his own party—the campaign committees, cautious moderates, Senate Republicans with eyes on winning a majority, and even some misinformed Tea Partiers who came to Washington believing balanced budgets could come from eliminating earmarks. Since 2011, budget proposals coming out of the House of Representatives have included major reforms to Medicare and Medicaid, so most Republicans are on record in favor of entitlement reforms that Trump still opposes.
But with Trump giving them cover, some House and Senate Republicans want to retreat. Their reasoning: Why take a vote that Democrats can use against them if the president is on the record opposing bold reforms? The glimmer of good news is that House Budget chairman Diane Black intends to include entitlement reform in this year’s budget, according to sources familiar with her thinking. Democrats, whose interest in entitlement reform begins and ends with politics, will surely howl. But including the reforms would be an important statement that Republicans understand the magnitude of the challenge.
The Trump White House, however, seems determined to put it off. Former congressman Mick Mulvaney, the South Carolina debt hawk who is now director of the Office of Management and Budget in the Trump administration, shrugged off questions about entitlement reform, telling ABC News: “Those are bigger discussions for another day.”
This is exactly backwards. Because they’re so big, these are discussions we need to have now. “Things are just going to get worse,” says Michael Tanner, a senior fellow at the Cato Institute and author of Going for Broke: Deficits, Debt, and the Entitlement Crisis. Avoiding the problem now will not only crowd out other spending, says Tanner, but “it’ll mean anything we do in the future is going to be more drastic and more painful.”
He’s right, of course.
Paul Ryan doesn’t see the gulf between congressional Republicans and Trump that seems clear to us. Ryan said last week that he believes Trump will support some entitlement reform, despite the president’s many promises to protect the current system. “[In] all my conversations with the president, he says, ‘I don’t want to change Medicare benefits for people in or near retirement,’ and we agree with that,” Ryan said.
We suspect this is better seen as evidence of Ryan’s undying optimism than a real possibility of entitlement reform under President Trump. But if the president truly wants to fix Washington and address the expanding debt, as he often claims, he can turn to Ryan for solutions.
As the president said in his address to Congress: “The time for small thinking is over.”
