America is not broke
But America is not broke. Our short-term budget outlook is stable, and our long-term challenges are manageable if both sides are willing to compromise. So why would politicians falsely claim that we’re broke? To justify radical changes to our nation’s social contract that Americans would never accept any other way.
This may be surprising, given how much we hear about a looming “debt crisis.” But annual budget deficits have fallen by almost two-thirds over the past five years. The total national debt is actually projected to shrink in each of the next three years as a share of the economy.
Exaggerating our debt does not advance smart fiscal policies. It does, however, undermine the social programs created by the New Deal and the Great Society by making their successes appear hopelessly unaffordable and doomed to failure.
If our debt is out of control, then Social Security, Medicare and Medicaid would seem like unrealistic pipedreams. Feeding the hungry, rebuilding our infrastructure and educating our children would sound like nice ideas, but too much for the government to handle.
That’s where the Republican budget comes in. For the past few years, House Republicans have passed a budget that radically reduces support for healthcare, economic opportunity and a safety net for hard times. By claiming to address an urgent “debt crisis,” it dismantles the social contract that Americans have made with their government for decades.
These Republican budgets replaced Medicare with a voucher to help pay for health insurance. But that voucher would fail to keep up with the rising cost of healthcare, so those expenses would just shift from the government to senior citizens. Many elderly Americans would no longer be able to afford healthcare, which was why President Lyndon B. Johnson and Congress passed Medicare in the first place.
Medicaid beneficiaries fare even worse. Recent Republican budgets have sought to repeal the Affordable Care Act’s Medicaid expansion and then cut what is left of Medicaid by roughly one-third. Millions of the most vulnerable Americans would lose their health insurance.
Last year’s Republican budget also required enormous cuts to education, research and infrastructure, all of which are responsible for widely expanding economic opportunity. These cuts would have been so destructive that the House Republicans would not be able to follow through with specific spending bills that would have implemented their own budget.
It is true that the United States has long-term fiscal challenges. But these problems can be solved. An aging population and rising healthcare costs will make Social Security, Medicare and Medicaid more expensive. Today’s tax code is inadequate for our national needs. A balanced mix of spending cuts and tax increases, as proposed in a Center for American Progress plan, would address these long-term budget challenges.
We need to cut spending by slowing the increase of healthcare costs. The good news is that healthcare cost growth has slowed dramatically over the last few years, which may be due, in part, to the cost control provisions in the Affordable Care Act.
But there is more work to be done. President Barack Obama’s budget proposes additional changes to federal health programs that would cut spending by more than $400 billion in the next 10 years.
We cannot stop the population from aging — which is why politicians will need to look to our tax code if Social Security, Medicare and Medicaid are to survive for future generations. The federal government now loses more than $1 trillion annually because of the many tax breaks, loopholes and subsidies created by Congress over the years.
Some tax breaks are worthwhile. But many others flow primarily to the wealthiest households — the people who need government assistance the least. For example, low tax rates for capital gains and dividends increased the budget deficit by $161 billion in 2013. The bulk of that money — 68 percent — went to those with incomes in the top 1 percent.
With a bit of compromise, the triumphs of the New Deal and the Great Society can remain a cornerstone of American economic security for generations to come. But instead of compromising, the loudest proclaimers of national bankruptcy are often the same politicians calling for the deepest cuts to Social Security, Medicare and Medicaid.
America is not broke. Politicians who claim otherwise are just using scare tactics to sell an unpopular, unnecessary and deeply destructive conservative agenda. Don’t buy it.
PHOTO (TOP): Representative Paul Ryan (R-Wis.) attends the Faith and Freedom Coalition Road to Majority Conference in Washington, June 14, 2013. REUTERS/Mary F. Calvert
PHOTO (INSERT): Representative Paul Ryan (R-Wis) (2nd L) speaks at a news conference about debt relief legislation with Majority Leader Eric Cantor (R-Va.) (L), Representative Cathy McMorris Rodgers (R-Wash.) (2nd R) and House Speaker John Boehner (R-Ohio) (R) at the Capitol in Washington August 1, 2011. REUTERS/Jonathan Ernst