Trustees, CBO Show Why 2016 Candidates Should Focus on Budget Reforms | Commentary
By John Tanner and Michael Castle
When the trustees who oversee Medicare and Social Security recently issued their annual reports, there were no surprises.
Nor were there any big surprises a few weeks earlier when the Congressional Budget Office updated its Long-Term Budget Outlook.
And that’s the problem.
Each year the trustees have warned lawmakers that Social Security and Medicare are not on a sustainable track. The CBO has routinely offered a similar warning for the entire federal budget.
Just as routinely, lawmakers have ignored these warnings. But the new reports are worth reading because they detail why Washington’s can-kicking ritual on federal budget problems will ultimately harm the economy, make entitlement reform more difficult, and unfairly burden younger Americans.
With a slew of candidates now competing to become the next president, voters should take these warnings seriously. We will not just elect a president in 2016. We will elect a fiscal steward, one who will either lead a transition to a better future or preside over a steady decline.
That is why, as former House members from different political parties, we support an initiative by The Concord Coalition and the Campaign to Fix the Debt called “First Budget.” It is raising public awareness of the nation’s unsustainable budget policies and encouraging the 2016 presidential candidates to answer a simple but important question:
“If you are elected our next president, what will you do in your first budget to address the national debt?”
To understand whether candidates are making sense on this issue, voters need to understand the nature, magnitude and urgency of the fiscal challenge.
All of that is made clear in the CBO and entitlement program reports.
The nature of the problem is a systemic mismatch between growing retirement and health care benefits and the revenues available to finance them under current law.
“Mainly because of the aging of the population and rising health care costs,” the budget office says, “the extended baseline projections show revenues that fall well short of spending over the long-term, producing a substantial imbalance in the federal budget.”
CBO estimates that major health care programs and Social Security together will grow from 10.1 percent of the economy (GDP) in 2015 to 14.2 percent in 2040.
That is an enormous increase. To put it in context, adding that much to this year’s budget would increase spending by about what is currently devoted to defense, education and transportation combined.
While health care and Social Security rise, all other programs are projected to decline as a share of the economy, from 9.1 percent in 2015 to 6.9 percent in 2040.
The Social Security trustees also discuss how Medicare and Social Security are becoming increasingly dependent on general revenue subsidies that total $364 billion for the current fiscal year. In addition to squeezing other important priorities in the budget, this puts upward pressure on federal deficits.
The trustees urge lawmakers to act quickly so reforms can be phased in gradually, giving workers and beneficiaries time to adjust. In addition, this would ensure the burden of any revenue increases or benefit reductions would be more widely shared.
If a candidate does not address these basic dynamics in the budget, it will be hard to take his or her plans seriously. Simply cutting waste in government agencies, including the military, will not suffice.
Candidates will need to discuss long-term savings or tax increases, not just short-term crisis management.
The magnitude and urgency of the problem can be seen by CBO’s calculation that the annual amount of deficit reduction needed to keep the debt at today’s level would increase to 1.4 percent of GDP if actions were delayed for five years — and to 1.9 percent if delayed for ten years.
The longer the delay, the more difficult the job becomes and the more the burden is shifted to future generations.
And that highlights what’s really at stake. It’s not just about numbers. We have a moral duty to overcome whatever political obstacles may exist in pursuit of a brighter future for our children and grandchildren.
Former Reps. John Tanner, D-Tenn., and Michael Castle, R-Del., are co-chairs of The Concord Coalition, a nonpartisan organization that supports greater fiscal responsibility in Washington.
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