Trump Is Out of Line
You probably have noticed television ads attacking Ron DeSantis from groups supporting Donald Trump. One of these ads “You don’t know Ron DeSantis” goes after the Florida Governor for voting for changes in Social Security and Medicare while DeSantis served in Congress.
It is certainly fine with us if politicians point out their differences with each other in the primary season. However, the 11th Commandment from Ronald Reagan should be observed. The Gipper’s wisdom was that one should not attack a fellow Republican. Point out differences for sure, but don’t attack the integrity of the other candidate.
Maybe we have devolved too far to even entertain such gentile views and attitudes today. But attacks often just aid the opposition party. That was the reason for Reagan’s admonition.
Trump is no longer an outsider and has to use flying elbows to get position under the basketball hoop to make a shot. He is the titular head of the party. He is a former President and thus has a good position to start with. This is not like the first time he ran, as a complete “outsider.”
However, that is not the chief reason for concern about this ad. What is most bothersome is that it is just this kind of demagoguery that has driven much of America’s deficit crisis and stifled any attempts to fix a very serious problem. The reason is if you want to be serious about fixing the deficit, and all the spin-off problems it causes ( inflation,wealth redistribution, capital markets distortion, accounting distortion, savings destruction, intergenerational transfers, Federal Reserve hyper-interventionist action, rising interest rates, and generally the problem of enormous government and citizen dependence on the state), you have to go where the spending is.
Below is the source of new spending as projected by the Congressional Budget Office.
No one can speak seriously about dealing with chronic deficits and chronic inflation unless they are willing to talk about entitlement reform in both Social Security and Medicare. It simply can’t be done.
These two social “entitlement” programs are already about 50% of all spending and along with interest (caused by the rising deficit) will be the source of 79% of new spending. And they are growing fast. Because we are living longer, and the number of new workers is falling because fewer seem to want babies, it creates a big problem.
Look at what is going on in France. Just suggesting that the retirement age be extended by two years is bringing the country to the edge of civil war.
The cold hard fact is when most of these programs were designed, people started getting their benefits at about the time of their actuarial death. It was never designed for people to live 20 or 25 years in retirement.
In the 1930s, when you were 65 you were quite old (actuarial death), but that is certainly not true today. We had more intact families then, having children, three or four, was the norm.
Well, you say you have paid into the program. Indeed you have, and on average, most people will pull everything they paid into the program out in about 6 to 7 years. Who pays after that? It is not a fully funded retirement program but rather a “pay as you go system” where you paid in for your parent’s retirement and your kids’ pay for yours. For such a Ponzi-like structure to work, you need a larger younger population coming in behind the elderly.
That used to be the case. In the mid-1950s, there were about 14 workers for each Social Security recipient. But now it is below 3:1 and falling.
The program needs to be fixed! It is unsustainable.
Already Social Security is in negative cash flow, i.e. the system is paying out more money than it is taking in. The “trust fund” or “lock box” in Al Gore’s terminology, is in nonmarketable US Treasury bonds. This is simply a slick accounting trick where one agency of government lends money to another. As these “bonds” must be sold to pay benefits, it will cause the “unfunded” liability to become a “funded” liability. Who will buy these bonds and at what price (interest rate)?
Politicians will not be able to reduce the deficit by having Social Security buy a big slug of the national debt, Social Security will be selling its bonds to fund benefits and others will have to take up the slack. It is complicated, but the short explanation is that it will drive the deficit even higher, causing a disturbance in either interest rates or inflation because the sums needed are so massive.
Reform will likely require some reduction or restriction in benefits and some increase in funding…increasing payroll taxes or other funding. To remain solvent, you must have more money coming in than going out.
Social Security and Medicare (and its sister Medicaid) are by far the largest expenditures made by the US and State governments.
They were poorly designed in many ways and are now being eaten alive by demographic changes.
There is no doubt politicians have abused the system. The government has used “trust funds” as its own piggy bank. Politicians have regularly increased benefits to specific groups for political reasons, without having those groups actually pay into the program. We have just seen a version of this from Biden, demanding Medicare healthcare coverage for DACA people. But with Medicare already in financial jeopardy, extending benefits without funding simply weakens the system for everyone, including those that have paid into the program for a long period of time.
Previous attempts to reign in spending, raise revenue, and otherwise stabilize some of these programs have been met by the worst kind of political demagoguery by Democrats. Remember the now infamous Democrat TV commercial of Speaker Paul Ryan pushing Grandma off the cliff?
The Democrats have made any discussion of reform of these programs the third rail of American politics. Even by bringing up the subject of the need to reform these programs, you are basically committing political suicide.
Well, now we see some Trump supporters use the same tactic. It is just as despicable. Worse, they should know better.
We have just had another report from the Trustees of Social Security that the program will be short of funds by 2034, one year earlier than the last calculation, and that if nothing is done, it will cause an approximate 24% cut in benefits across the board. There is no assurance, especially if we have a recession and slow growth, that the due date will not come even closer.
Almost a third of Americans retiring today will depend solely on Social Security. For many others, it is a third to even more of their retirement income. Thus keeping the program solvent, by initiating sometimes painful and politically risky reforms, are necessary.
But doing nothing is actually worse than talking about reform. It will cause indiscriminate cuts which will adversely hurt those most dependent on the programs.
Actually imposing such cuts, will stir social rebellion. It is unfair to make those kinds of cuts when people have been assured of the benefit and already planned their lives around it. That is especially true for the elderly, who have little time left and can’t earn money to make up for the differences. This is not like breaking an agreement with a 25-year-old who has both time and opportunity to adjust to the failure to deliver on a promise.
The Republican Party is the closest we have to “an adult party.” If we want something fixed, we Republicans will have to do it. We are supposed to be the party of fiscal responsibility and financial probity. Lately, we seemed to have abandoned that role. If so, who is going to fill it?
If we can’t have a civil discussion, even within our own party and among our own candidates, how are we ever going to solve these quite serious and difficult problems? We can’t with such limited space explore and expound upon the various options available. What we are saying is we need to have a discussion in a civil way to discuss reasonable options to fix Social Security.
What we don’t need is more political shenanigans to make both discussion and reform impossible.
Trump makes having that discussion more difficult by demagoguing the subject like a Democrat.
It is beneath him and his supporters to act this way. They need to stop behaving like this.
We can’t talk about controlling deficits, inflation, and sound monetary policy if we can’t talk about the very programs driving spending and deficits through the roof.
We don’t need to act like childish Democrats.
