It seems to me that the discussion around deficits and the debt ceiling from each political party centers more around political talking points and does not illuminate. Mr. Rosenberger’s take on the Deficit leaves out much that should be considered, starting with the U.S. Budget that is about 160 pages in length. For example, the fact that Social Security is 23% of federal expenditures leaves an inaccurate picture of the deficit, which I will discuss shortly.
The budget does not tell the whole story here. For one, the Department of Homeland Security, which came into being under George W. Bush in 2002, plus the classified budgets of the CIA and NSA, brings Defense spending to over a trillion dollars a year. This year the defense budget was increased by $45 billion over what was requested by the Defense Department. It must be noted that even though listed here, Social Security is off budget and in a legislative lock box. All funds are from Social Security taxes only and do not reduce the deficit. Reducing Social Security benefits, such as raising the age to collect benefits, does not reduce the deficit, it only increases the SS surplus. The fact politicians may use the SS surplus to make their deficits look smaller is a ” Talking Point,” and not the law. Again, Social Security is self-funded by Social Security taxes and ” Off Budget.” When Social Security funds are “borrowed” for other government spending this is done via Treasury Notes. To default on Treasury Notes would be to also default on the deficit debt held by China and Japan ( Treasury Notes) and cause a world wide financial crisis/recession.
The Social Security surplus was about $2.5 trillion in 2009, when the first Baby Boomers began collecting, and has grown to about $2.9 billion. Higher wages in the last decade has increased SS receipts, coupled with nearly a three year decrease in expected life span for Americans. Medicare/Medicaid, coupled with for profit healthcare, has put us at about $12,500 per person, more than twice the other advanced democracies on average. Everyone’s costs did go up during Covid, with ours going up the highest, even though we have under 5% of the world”s population, but had nearly 25% of the world’s deaths among the 33 industrial democracies. Inspite of what we pay for health care we still have millions without health care and millions more that cannot afford the cost sharing. Thirty years ago we could expect to live as long as the Italians. Unlike the Scandinavian countries, or Germany, Japan and France, Italy has only a little over 60% of our per capita income. With universal health care Italians now live almost three years longer than Americans.
It has always been telling to me that when the GOP beats the deficit drum the hardest, it is always after the GOP ran up the deficits and the Dems are back in power. When Obama was President and they were banging this drum, during the George W. Bush Great Recession when stimulus was needed, there was an interesting report from the Congressional Budget Office(CBO). The CBO, headed by a conservative from the American Enterprise Institute, stated than even though George W. ran huge deficits fighting two wars on the credit card, the majority of his deficits were the two Bush tax cuts that favored the wealthy. Simple addition and subtraction also establish that the four years of Trump gave us about 25% of our total deficit (for all 246 years). According to economists who have actually won a Nobel Prize for their work, deficits can be concerning, but are not a major concern unless they exceed, year after year, the total GDP of our economy. Federal deficits are not the same as State or household budgets, unless you and the state can print money. For eight years under Obama’s Stimulus, Wall St Bailouts, and capital for a failing auto industry, conservatives screamed “double digit inflation” while in fact inflation remained low. It has become clear that our current, now declining inflation, has more to do with supply lines due to the Pandemic, and near monopolies using the current situation to raise prices much higher than any cost increases. I would take this GOP concern for the deficit more seriously if they did not stop everything that would reduce the deficit and help working people. Living wages, progressive taxes, an end to loopholes like carried interest, a minimum tax for the rich and corporations, and universal health care. Think the GI Bill that returned to the economy $1.70 for every dollar spent, investing in education, health care, and housing.
The time to address deficits is when Congress passes the legislation and appropriates the funds is where revenue and the deficit should be addressed. Congress, using the power of the purse, already voted on and spent the money. The GOP should not get a second bite of the apple by refusing to raise the debt ceiling. It is the responsibility of the President under the 14th Amendment that, ” the validity of the public debt of the United States, authorized by law,” “shall not be questioned.” Congress has already authorized by law, via legislation, the U.S. debt. A fight on this issue and/or a failure to raise the debt ceiling would be fiduciary failure on a massive scale.