America’s economy is in robust condition, as new Labor Department data showing unemployment at 3.8 percent confirms.
America’s long-term finances, however, are not in such good shape, as another federal report, this one out Tuesday from the trustees who oversee Social Security and Medicare, reminds us. If present trends continue, the trust funds that pay retirement and disability benefits under the former program will, when taken together, run out in 2034; the Hospital Insurance Trust Fund under the latter will be exhausted in 2026, three years earlier than the trustees forecast last year.
The Trump administration’s response, essentially, is to take credit for the booming economy and cite it as a reason not to worry about the two biggest entitlement programs in the federal budget.
“The Administration’s economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path,” Treasury Secretary Steven Mnuchin said in a statement. That’s what he would say, given that fiscally irresponsible Republican policies, those ballyhooed tax cuts included, will add $1.6 trillion to the federal deficit over the next 10 years, according to the Congressional Budget Office.
When, inevitably, the United States does not grow its way out of this problem, revenue will have to be raised, and Social Security and Medicare may face sudden, sharp cuts along with other worthy programs.
The best thing to do is to legislate modest reforms to the entitlement programs along with higher taxes (including Social Security payroll taxes) for those most able to afford them.
Unfortunately, Trump’s addition to Republican ideology was to commit the party to never doing either of those things.