A must read: The Politics of Avoidance
America’s budget problem boils down to a simple question: How much will we let programs for the elderly displace other government functions — national defense, education, transportation and many others — and raise taxes to levels that would, almost certainly, reduce economic growth? What’s depressing is that this question has been obvious for decades but our political leaders have consistently evaded it. This includes and indicts Democrats, Republicans, conservatives, liberals and every president since Jimmy Carter, particularly Bill Clinton and George W. Bush, who clearly understood the problem.
Our political culture prefers delusion to candor. Liberals would solve the budget problem by taxing the rich and cutting defense. Think again. The richest 5 percent already pay about 45 percent of federal taxes; they may pay more but not enough to balance the budget. Defense spending constitutes a fifth of federal spending; projected deficits over the next decade are similar. We won’t shut the Pentagon. Republicans and tea partiers think that eliminating “wasteful spending” would allow more tax cuts. Dream on. The major spending programs, Social Security and Medicare, are wildly popular with roughly 50 million beneficiaries.
It’s worse than most people realize because the truth about Social Security’s liabilities has been hidden from the public by fancy economic babble like “the trust fund,” and 75 year windows. But in 2003, a small section in the Social SecurityTrustee’s Report Actuarial Estimates showed the program’s unfunded liability to be $10.5 trillion. In addition, every time Washington punts the ball, the problem becomes more expensive to fix. The American people can’t afford for Washington to continue to do nothing.