Phil Klein and others have talked about how the Republican Party is rallying behind the idea that its best policy and political path is to refuse to talk about reforming Social Security and Medicare. They are right. Until now, the idea was contained to the political arena. Now leading the charge, however, is a heavyweight budget geek, former OMB director under President Trump, and current president of the Center for Renewing America, Russ Vought.
If there is one sure thing about Vought, it is that he knows his way around a budget. He put out a document and a strategy that he is advertising to Republicans who would love nothing more than to believing there is an easy way out of this mess. The plan is simple: Don’t touch popular programs, eviscerate woke programs and agencies that weaponize the government against the American people, balance the budget in ten years, and be loved while doing it.
(As a side note, “Woke and weaponized” is the new “waste, fraud, and abuse.” Sure, there’s a lot that can be cut — a lot. But it’s not as much as you think, and “woke” is not a line item.)
Also, it may be a little crabby of me to point out, but here it goes: There was a lot of money that was sent to states and local governments while Vought was the director of OMB. A lot of that was used to do the stuff that he’s now complaining about. This is what happens when you have a system wherein the federal government subsidizes states and local governments without oversight.
I see three major issues with Vought’s vision:
- His goal is to balance the budget in a decade. After extending the Trump tax cuts, not touching old-age social insurance benefits, and even assuming a fantastic economy (more on this later) balancing the budget would require massive reductions to lots of other programs. For instance, his plan over the decade cuts Medicaid by $2.1 trillion (35.4 percent in 2032), defense by $514 billion, (14 percent in 2032), non-defense discretionary spending by almost 40 percent, and mandatory spending (other than Medicare, Medicaid, and Social Security) by $2.5 trillion (76.2 percent in 2032) — look at S-2 (baseline) and compare it with S-3 (proposed budget) for each category. Good luck with that.
- There is a lot to cut everywhere. But I disagree that voters would rather eviscerate most anti-poverty and social spending (Medicaid, SNAP, student loans, disability) before they would even accept a phase-in of modest Social Security and Medicare changes. In other words, this plan is a political nonstarter.
- Balancing this budget requires gimmicks and rosy assumptions. All budget blueprints try to pull it off, but I am disappointed to see someone like Vought do so. He knows better. A third of all savings are coming from assuming the real GDP grows at nearly double the CBO projection (2.8 percent vs. 1.65 percent). That isn’t going to happen, especially if his cuts are political nonstarters.
The biggest problem with the plan, however, is that it continues the fiction that it’s okay to lie to the American people about Social Security and Medicare’s benefits not having to be touched. Former president Trump and President Biden can sing this tune in unison, but it doesn’t make it true. And the fact that cutting benefits is unpopular with voters doesn’t change the spending math. As Brian Riedl has said many times on Twitter and in his work, Social Security and Medicare alone will face a $116 trillion shortfall over the next 30 years.
In addition, in less than ten years, according to CBO, the combined Social Security Trust Funds will be depleted. That’s right when Vought’s budget window ends. Medicare’s trustees say its Hospital Insurance Trust Fund will run out even sooner than that. When this happens, if Congress hasn’t come up with serious reforms, Social Security benefits will be cut by roughly one quarter, according to its trustees. The alternative is to raise the payroll tax by more than 30 percent. A more likely scenario is that that politicians will transfer money to pay Social Security benefits from general funds, doing away with its longstanding structure as a benefit workers earn with their payroll-tax contributions, eliminating any connection between workers’ employment earnings and their benefits, and running it as just another welfare program competing for funding from the government’s general fund. If you believe that touching benefits isn’t popular, try ending a program Americans would prefer to retain by replacing it with a welfare program lacking Social Security’s financial controls or earned-benefit requirements. The same scenario is true for Medicare, except the numbers are scarier.
Preparing for what’s to come requires time, bipartisan work, and an honest nationwide campaign to explain what and why things must change.
I want to leave you with one final thought: Policy problems that exist on a generational time scale demand leadership, and it is therefore vital that America’s robust intellectual institutions, including think tanks and principled advocacy groups, fill this role.
Unfortunately, this budget not only misses the mark on technical grounds by providing political cover to simplistic and ultimately decadent quasi-solutions, but it abjures leadership at a time when it’s desperately needed in favor of currying short-term political favor.