The Corner

Overlooked in Obama’s State of the Union: We’re Broke

Last night’s State of the Union address was a repeat of what we have experienced many times in the last six years: The president thinks of himself as a reasonable compromiser, he calls for bipartisanship and working together with Congress and the Republicans; and then he ultimately won’t give an inch about his own policies and his own emphasis on more government intervention in people’s lives.

His positions on taxes haven’t changed since 2008, he’s once again talking about giving a fair shot to everyone without any gesture toward the fact that he could have tried passing policies to do that over the past six year, and he’s still trying to push a passel of policies that will increase the cost of labor.

But more striking in my opinion is his complete silence on the state of our public finances. Let’s just consider all the things he didn’t mention: The Social Security Disability Insurance trust fund will be empty in a year, leading to about a 19 percent cut in benefits. Whatever your position is about the role of government in providing disability insurance, we can’t ignore the issue for much longer. I suspect the president and Democrats would like Congress to change the law so the disability program can get some of the taxes that now go to the other Social Security trust fund; as my colleague Chuck Blahous (a Social Security trustee, as it happens) has explained, this won’t fix the problem — which is why the debate over the issue needs to begin.

Whatever Congress does with the disability fund, Social Security is also on an unsustainable path and will face its own large cuts sometime after 2030. There was also no mention either of the explosion of spending in Medicare and Medicaid — slowdown in health inflation or not — or any suggestions about how to address that problem.

Mandatory spending consumes the majority of our budget, and its share will continue to grow. It’s not a recent phenomenon, as you can see on this chart:

The rest of the budget – the money we spend on roads, education, the military, etc. — is still projected to grow in nominal terms in the future, but much more slowly than mandatory spending.

The president made it clear last night that his biggest priority for our future is to fight global warning, which ignores that simply running out of money is going to make it impossible, eventually, to pay attention to other priorities. The world has budget constraints.

I did love his shout out to future generations and how much “we” value them. Well, Mr. President, if you value our kids so much, now is the time to engage in fundamental reforms of Social Security, Medicare, Obamacare, and Medicaid. If you don’t, you’ll be sending a strong signal that the only reason you value future generations is that they’ll be the ones paying for our unpaid bills. 


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