“The agreement – while far from perfect – underscores the extent to which the new House majority has successfully changed Washington’s culture of spending. No longer can Washington endlessly spend money it does not have.”
“The Joint Committee is designed to function and to tackle some of the very difficult problems that we have been unwilling or unable to deal with. The [Social Security and Medicare Boards of Trustees] say they’re both in trouble. Medicare sooner than Social Security.”
That was then-House Budget Chairman Paul Ryan and then-Senate Minority Leader Mitch McConnell on August 1st, 2011 following the passage of the Budget Control Act of 2011. On that day, the national debt was $14.3 trillion and the actuaries projected the Social Security Trust would go bankrupt in 2036 and Medicare’s Hospital Insurance Trust in 2024. Our long-term debt projections were dire and they were the leaders of a party resolved to fix them for their kids and grandkids.
Today, the national debt stands at $20.5 trillion and the actuaries project that Social Security will go bankrupt in 2035 and Medicare’s Hospital Insurance Trust will do so in 2029. Our long-term outlook is still just as dire, yet the same leaders are working to fix their kids and grandkids with an unbearable debt load.
Coming off the 2010 midterm election, the new-Republican majority in the House of Representatives used a negotiation over a debt ceiling increase to force the Democrat controlled Senate and President Obama to agree to fiscal controls over the federal budget. The Budget Control Act of 2011 placed caps on the discretionary budget to reduce the deficit by $900 billion. President Obama said this was “just the first step. This compromise requires that both parties work together on a larger plan to cut the deficit, which is important for the long-term health of our economy.”
That plan came in the form of the Joint Select Committee on Deficit Reduction (JSC), known as the “Super Committee,” which was supposed to come up with $1.2 trillion or more in additional savings. If the Super Committee failed, the savings would be achieved by lowering the budget caps with equal part reductions in defense and nondefense spending. The first hit would be an actual cut and then a lower but gradually increasing spending baseline.
The intent of the Budget Control Act was to provide incentives for bipartisan work on our long-term debt problems. The assumption was Republicans and Democrats would want to spend more on defense and domestic programs, respectively. Therefore, threatened cuts to their treasured programs would compel them to find long-term budget solutions in the Super Committee, or else. The fear of the “or else” failed to change habits and force compromise. Here is what transpired:
2013 – the Bipartisan Budget Act raised spending by $62 billion above the caps. No long-term changes.
2015 – the Bipartisan Budget Act raised spending by $80 billion above the caps. No long-term changes.
This week – Congress just completed a massive package that will increase spending by $300 billion above the caps. This is barely a month after the Republicans enacted a tax cut of equal magnitude ($150 billion per year).
Both parties share responsibility for failing to address our long-term debt issues. But given the party’s rhetoric about fiscal responsibility over the last decade, the fact that this is happening under an all GOP-watch should be the biggest political scandal in the news. No, it does not have the intrigue of confidential memos and salacious dossiers – but it will have a far greater impact on the course of our nation. We are witnessing the betrayal of an entire generation.
The Congressional Budget Office recently revealed jarring statistics that show just how deep in trouble we are. It will take an average of $620 billion in deficit reduction every year just to return to our historical average debt-to-GDP level by 2047. This equates to $1,900 in annual tax increases or a 17 percent tax hike for every American. It will take $380 billion in deficit reduction every year to stay at our current abnormally elevated debt levels – or an $1,100 per person tax hike.
Guess which generation is going to get stuck with this bill? Millennials.
Making budget concepts and incomprehensibly large numbers meaningful is difficult. But policymakers in Congress and their staff understand exactly what they are doing.
Policymakers know the promises that have been made. They know that there is a looming demographic crisis in the form of a baby boomer retirement wave. They know that every objective, non-partisan analysis describes our fiscal outlook as dangerous and unsustainable. They know time is running out to fix these problems. They have known these things for a long time.
They are betting their jobs that our nation’s 85 million millennials don’t. That’s a calculus that needs to change.
