Raising the debt ceiling without firm commitments to control future spending – and in particular to control the spending on programs like Medicare, Social Security, Obamacare, and Medicaid — would be irresponsible. In fact, there is no question in my mind that we need to take the necessary steps today – genuine entitlement reform and spending caps – to ensure prosperity and long-run growth. This is why, as the continuing-resolution fight morphs into a debate over the debt ceiling, it’s reasonable for the Republicans to make the case that an increase in the debt limit be done alongside a commitment to fixing our fiscal outlook.
As such, I disagree strongly with those who claim that the fights over raising the debt ceiling are the sign of how dysfunctional Washington is. The best sign that Washington is dysfunctional is the size of the federal government, the years of overspending, and the projections of unsustainable debt and deficits into the future. It should make us wary, therefore, of accepting deals that trade the small gains we’ve made — the sequestration cuts — in exchange for promises about entitlement reforms, which can be easily forgotten. Entitlement-reform champion Paul Ryan proposed just such a strategy today, and let me explain why it looks misguided.
Both parties are to blame for this. The Democrats aren’t serious about cutting spending (as evidenced by the $3.77 trillion Obama budget and the $3.71 trillion Murray/Senate budget). They are also not serious about long-term fiscal discipline. In fact, they mostly talk about expanding spending on just about every program and remain in denial about the problems face by their flagship program, Obamacare. In addition, while the Republicans are rightly made fun of for talking about cutting spending and never being able to list which programs should be cut, the Democrats are no better. Granted, they plan to increase spending than failing to explain how they’ll cut it. But in a world of scarce resources, even they should understand that you can’t have it all. For instance, if they want to expand Medicare, Obamacare, Social Security, and Medicaid, they should be willing to articulate a vision for cutting the rest of the budget. They aren’t. They aren’t even a productive force on reforming defense spending, and have been as willing to go to war as the Republicans.
The Republicans at least are more willing to acknowledge our fiscal problems. At least in recent years. In fact, they even have a plan, the Ryan plan, to reform some of our entitlements. However, that plan leaves Social Security untouched (subjecting lower-income Americans to potential, serious spending cuts when the trust funds dry up). In addition, while the plan repeals Obamacare, it pushes off urgent Medicare reforms until 2024. This is not acceptable. According to the Trustees’ Report, Medicare will become insolvent by 2024. If you read the letter at the back of the Trustees’ report, however, it’s obvious that these are extremely rosy estimates and that Medicare will be insolvent way sooner than that. Finally, we shouldn’t forget that when they have been in power under President Bush, they expanded the program by implementing Medicare Part D. In other words, if history is our guide, it’s hard to believe Republicans when they tell us that if they were in power again they’d be willing to reform Medicare and cut spending. In addition, their refusal to put defense-spending levels on the table is unsettling. Not every defense dollar increases our security, not every weapon system is worth buying, and the Department of Defense is long overdue for a serious reform.
We could provide relief from the discretionary spending levels in the Budget Control Act in exchange for structural reforms to entitlement programs.
So in theory, sequestration and the BCA caps would be traded for a commitment to reform entitlements. However, in the current political contex, we should expect that this commitment won’t be credible and won’t be enough to address our country’s fiscal problems. As such (I have mentioned it before), it would be a terrible mistake to get rid of these cuts. These are the only cuts they have in the bag; they shouldn’t give them up. They especially shouldn’t give them up if what they are most likely to get in exchange are, at best, a few meaningless entitlement reforms that won’t make much a of a dent in our debt.
Finally, since when does Paul Ryan sound like a Keynesian? Does he really believe that the tiny sequestration cuts are hurting the economy so much that we must “provide relief”? Argue for entitlement reform, Mr. Ryan, but don’t squander for nothing or next to it the only cuts we’ve won.