Pausing in its daily delusion for its longing impeachment of President Trump, The New York Times asserts, says Chapel Hill columnist D.G. Martin today on this page, that the federal budget deficit jumped to nearly $1 trillion because “the government was forced to borrow more money to pay for President Trump’s tax and spending policies.”
Writing that Democrats in Congress increased spending by $320 billion over two years, he says Mr. Trump shares the blame. He adds that Democrat presidential candidates promise “costly domestic spending plans without specific revenues to pay for them.”
Which would increase the deficit.
Saying Mr. Trump can do nothing about the deficit until after the 2020 election, at Communities Digital News Michael Busler declares increased federal spending, not Mr. Trump’s tax cuts, caused the deficit to balloon.
A policy analyst and professor of finance at Stockton University in New Jersey, Mr. Busler says, “Contrary to what the media reports, the tax cuts enacted in 2018 did not add one penny to the deficit. Total tax revenues were slightly higher in 2018 than in 2017, and tax revenues were higher in fiscal 2019 than in 2018. After the tax cut, revenues did not decline. So the tax cut did not add to the deficit. Increased spending caused the deficit to increase.”
Citing the cause as a federal increase of $420 billion in 2019, Mr. Busler points out that the government will spend $4.5 trillion this year, and while tax revenue will increase again the deficit is projected to exceed $1 trillion because spending outpaces revenue.
Politically, he says Mr. Trump can’t reduce spending this year because $2.8 trillion — 62% — is designated for Social Security, Medicare and Medicaid. Interest on the debt is $400 billion, almost 9% of the budget, meaning 71%, or more than $3.1 trillion remains “untouchable.”
Of the remaining $1.4 trillion, about half will be spent on domestic programs and the other half will be spent on defense. “Defense spending, domestic program spending and interest on the public debt can likely resist attempts to reduce that debt, but entitlements may prove a different matter,” continues Mr. Busler.
With the age eligibility for Medicare at 65 and Social Security at 67, he notes rising life expectancies portend Americans could live to be 125 by 2070. So one might work for 40-45 years and then collect Social Security and Medicare for the next 50 years. Which is not sustainable.
As Social Security and Medicare are “pay as you go” systems, meaning those who contribute pay for the benefits of those who collect them, the cushion of six to seven workers contributing when Social Security was created in the mid-1930s has now dropped to less than three. Because retirees depend on Social Security and their benefits should not decrease, and raising the Social Security tax from 12.4% to 14.8% would strain the economy, Mr. Busler says a solution is raise the retirement age.
“More people will remain working and retirees will collect only for about 10-20 years.”
Predicting Mr. Trump will confront the deficit in 2021 and gradually raise the retirement age to 70, then 72 or even 75, Mr. Busler says: “While that won’t be popular, it is he least bad solution. We’ve already done this once and it worked. Doing the same thing again, using current data can and will reduce the federal government deficit.”
His suggestion is commendable. As Mr. Martin remarks, it would silence the alarm bells.