When former Vice President Dick Cheney nonchalantly quipped to former Treasury Secretary Paul O’Neill that “deficits don’t matter,” every fiscal conservative and anti-war liberal set their proverbial hair on fire. Under President George W. Bush, a modest surplus left behind by his predecessor was spent away on ill-advised entitlement programs, the mismanaged wars in Iraq and Afghanistan, and a retinue of other policies that should have never been tried in the first place. Budget deficits arise when spending is higher than revenue collected each year (in the form of taxes). The national debt is, in part, the accumulation of those budget deficits.
Under President Barack Obama, federal spending increased to historic levels. Obama spent more than all 43 U.S. presidents who came before him. By Obama’s second term, the national debt came to match the entire U.S. economy. Today, borrowing stands at $19.5 trillion and counting. Compare that to the size of the second-largest economy in the world (according to GDP), China, which tops $9.24 trillion. Not only does our economy outstrip China’s, but our debt burden is also larger than the entire Chinese economy!
Think about it this way: U.S. GDP is roughly $17 trillion. Under President Trump, it is expected to grow significantly. Yet, the debt burden will continue to outpace this incredible level unless the Trump Administration does something it has refused to discuss on the campaign trail: address the problems of entitlements and defense spending.
To some on the Right, the U.S. government is nothing but one, big, green military jobs program. There isn’t a job that the Pentagon cannot do and there certainly should not be a cap on what money is spent on the Defense Department. Never mind the endless amount of waste that the Pentagon commits. I suppose we should ignore the positive correlation between the size of the Pentagon bureaucracy and the increase in inefficiency. It’s the image that matters, right? As a friend of mine who works in the Pentagon recently remarked, “The DoD has become nothing more than yet another federal jobs program.” Cuts can—and must—be made there.
For the Left, the welfare state is the holy grail of public policy. It is the primary pillar that the modern Democratic Party is built upon. But that pillar has been slowly crumbling beneath the weight of retiring Baby Boomers (and, since Boomers did not reproduce in sufficient numbers, the subsequent dearth of young workers to make up for the strain that the Boomers, as they retire, are placing on the system).
Social Security, Medicare, and Medicaid account for 77 percent of America’s spending. Even without the over $1 trillion spent thus far on the Iraq and Afghan Wars, the Big Three entitlement programs are killing America’s economy.
But, let’s face it: the real economic killer is the intensive government spending on non-defense policies.
Donald Trump was the only Republican in the 2016 campaign who refused to attack the entitlement system. This was a smart move. People like Wisconsin Governor Scott Walker or Senator Ted Cruz of Texas had made touching the “third rail” of politics a core theme of their campaigns. This had the effect of scaring the elderly and unnecessarily giving the Left ammunition to use against the Republicans (mainly, the Left could convincingly, if erroneously, claim that the Right wanted throw grandma off of a cliff).
Trump’s refusal to offer an open critique of the entitlement system during the campaign enraged his Republican opponents. It also sent chills down the spines of the Left, as the Democrats could not use their preferred attacks against a Republican candidate; they couldn’t pigeonhole Trump as the irresponsible government slasher who was beholden to the wealthy (that was Hillary, actually). This sort of pragmatism should not have been shocking to anyone, though. Remember, Trump aggravated the Right during the primary in Iowa when he took the campaign pledge to ensure that Iowa farmers remained federally subsidized to grow crops for use in ethanol production.
That was smart politics. It kept pressure off of the Trump campaign and allowed the Trump team to continue taking the fight to his critics. Do you remember the famous Tea Party townhalls in 2009 and 2010? Do you remember the much-ballyhooed elderly gentlemen waving the sign, “Keep your government hands off of my Medicare”? While that man was mocked by the elites on both the Right and Left, his statement signified something powerful: that the populist movement taking hold across America, while opposed to Obamacare and excessive government overreach, refused to let go of their benefits from the Big Three entitlement programs.
To these people, it was their right; they had, after all, paid their hard-earned tax dollars into the system. Of course, the system was bankrupted long before those protests began.
If you are an elderly person today and are dependent upon Social Security payments, then you have likely witnessed a serious decline in your standard of living. Why? Because the federal government has routinely pilfered funds set aside for Social Security, Medicare, and Medicaid and used them for other purposes (robbing Peter today to pay Paul tomorrow). This is to say nothing of how Obamacare gutted Medicare, or how the Obama “middle-class tax cuts” drastically reduced the funding for Social Security.
President Trump needs to recognize that no matter how much job creation and prosperity he can foster in the short-term, it will all have been naught should the debt continue increasing at the rate that it has been these last eight years. As the Chinese finance minister warned Treasury Secretary Hank Paulsen in 2008, America’s debt has become a strategic liability for the United States (and for any country doing business with us).
The only way that the Trump Administration can avoid leaving a steaming bag of excrement for future generations is to make the case for serious reform in the entitlement system and for responsible defense cuts. What most Americans are paying into these entitlement systems is far higher than whatever they’re going to get in return. This is particularly true of my generation (the Millennials).
No other Republican has the standing required to make this argument with a large chunk of the American people (particularly Baby Boomers, who decide elections and policies in this country). Trump may be the only leader who can responsibly reform entitlement and defense spending. What’s more, Trump not being a typical ideologue means that he can address these problems in a meaningful way. While it is unlikely that he can address these issues in the next six months (he has to focus on Obamacare repeal and tax reform), the Trump Administration must begin orienting itself toward addressing the staggering debt load that this country has created for itself.
Significant reform and cuts to both defense and entitlement spending is the only thing that will reduce our public debt load. Should President Trump simply punt on this issue, I can assure you, resolving it will be untenable. Eventually, that ticking debt bomb will detonate—and all of us end up paying for it. President Trump is the only man who can prevent such a stark future from happening.
Deficits really do matter. They add to the national debt, which, as we’ve seen, is a ticking time bomb. We must, therefore, address deficit spending by reforming the way that the government spends the tax dollars that it collects each year. We’ve put off the reckoning for too long. President Trump has a singular opportunity to make a deal that would lower our deficit, reduce the national debt, and make our entitlement system and Department of Defense actually perform the functions they’re meant to do.