Cut Spending, Raise Taxes, or Wait for Economic Collapse

There are three options for dealing with entitlements.

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Republicans don’t want a tax increase—but a tax increase is exactly what they are arguing for, without quite meaning to. 

Put another way: Republicans are gearing up for a fight over raising the debt ceiling—and they say they want spending cuts, except for entitlements, defense, and veterans’ care. 

What that takes off the table is Social Security and Medicare, at least, while some Republicans, notably Rep. Jim Jordan, also say Medicaid cuts are not on the table. Together with defense spending and interest on the debt already accrued (the only federal bill that really has to be paid) that represents the great majority of federal spending. Let’s look at last year’s spending for some perspective. 

The 2022 breakdown was:

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  1. Van Sherman

    Math. And limits. They are mentioned prominently in this article. Well, twice each anyway.
    Drags me back to a Summer school class I took after sophomore year in college. It was a required calculus course for acceptance into the school of business, wherein and whereby I was to be taught how not to run a viable, ongoing commercial enterprise into the ground. I highly recommend to aspiring business career folks to undertake their intro calculus instruction during a Summer session. The carefree vibe of a lazy, sultry SW Ohio campus experimental touring season took the edge off an otherwise stodgy curriculum. I still don't understand, 50 years later, how a C+ grade in integral calculus certified me to not run a business into the ground at my leisure, but I digress.
    While I was above-average enough to understand the mathematical concept of limit functions, the philosophical implications of limits was more inspirational. Limits are the singularity of all human experience and any discussions thereof. Life lived or imagined without acknowledgment of limits is a lie. Fiscal policy without limits is worse then mendacity. It is criminal. Then again, so was that business I ran into the ground. It was all plain to see that beautiful languishing Summer of long ago - graphed out cleanly on a sterile Cartesian plane; as x approaches zero, y approaches infinity. But infinity never arrives. However, being ever ever closer to infinity is enough to not wish for it. Mostly. At least that was what stuck.

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    Realwoodies

    Yeah

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  3. Jkingston

    "And if anybody were to run for Congress with a halfway sane fiscal program that he was halfway honest about, he wouldn’t get halfway to Washington."

    Such great writing! More so because it makes one free associate a hobbit birthday speech.

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  4. Thomas.M.Hardman

    I have a question about the data cited in this piece. According to the Treasury Department’s website, federal spending was $6.27 trillion in 2022.

    https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/

    Kevin’s article links to the “Budget Function” section on USASpending.gov to show how much the federal government spent in 2022 on particular things (Social Security, Medicare, etc.). But if you go to that website and choose FY2022 in the “Budget Function” section, it indicates that total spending from “all budget functions” amounted to $9 trillion in FY2022.

    https://www.usaspending.gov/explorer/budget_function

    What is this $9 trillion figure referring to? Why is there a discrepancy between the $9 trillion reported on this website and the $6.27 trillion in federal spending reported on the Treasury Department’s website?

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      Javier Seravalli

      The USA Facts has the following numbers for spending:
      Social Security: $1220 billion
      Defense and Veterans: $1030 billion
      Medicare: $756 billion
      Medicaid and CHIPS: $609 billion
      Public Health: $140 billion
      Interest on Debt: $483 billion
      Total sending: ~$6480 billion
      These are also consistent with other numbers I've seen.

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    2. Thomas.M.Hardman

      Okay, I think the “Budget Function” section on USASpending.gov is showing *obligations*, whereas the Treasury Department’s website is showing *outlays*.

      According to the Treasury Department’s website, “outlays” represent “money that has actually been paid out and not just promised to be paid.” In contrast, an “obligation” is “a binding agreement … to spend the money, either immediately or in the future. … Obligations do not always result in payments being made.”

      https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/

      The figures that Kevin cites are obligations, not outlays. Is there a difference between obligations and outlays when it comes to Social Security, Medicare, and Medicaid?

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      1. Thomas.M.Hardman

        To answer the question I asked previously, yes, there is a difference between outlays and obligations when it comes to Social Security and Medicare. Kevin’s numbers are obligations; outlays are reported on the Treasury Department’s website. Outlays are lower (in some cases significantly lower) than obligations.

        https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/#spending-categories

        I agree with Kevin’s basic point. But it seems to me that it would be more appropriate to rely on outlays as opposed to obligations. I certainly might be wrong about that, though, and so I would appreciate hearing an argument as to why obligations would be more appropriate.

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    Javier Seravalli

    I am not sure the numbers on this article are correct. Wikipedia reports $755 billion budgets for Medicare and $914 billion for Health Care (Medicaid and other programs), not $1.5 and $1 trillion, all for 2022. Moreover, total spending is $ 9 trillion in the spending site, but the budget for 2022 was only $ 6.2 trillion, as Wikipedia shows. Revenues were $ 4.9 trillion and the deficit of $1.3 trillion do add up. I think the number might include State spending, but this is strange since Medicare has no contributions from the Sates.

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    1. Thomas.M.Hardman

      I have a very similar question (which I described in another comment). I don’t understand why the $9 trillion reported on USASpending.gov differs from the $6.27 trillion in federal spending reported on the Treasury Department’s website.

      Compare the website that Kevin linked to with the Treasury Department’s website:

      https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/

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    2. Jack H Wolf

      You might be right though there are two numbers. One is total expenses and the other is cost to government which is reduced by the 20% covered by enrollee premiums ie net expenses. For the purpose of the budget the net figure is what the Feds pay so more important and your numbers seem right. From this source ( https://www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2021-2030-projections-national-health-expenditures ) CMS estimates that in 2023 the expenditures are projected to exceed 1T though I dont know if they are talking total or net.

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        Javier Seravalli

        Thanks for the link. I downloaded the Fast Facts pdf (the Excel has also the same information) and the total CMS spending for CY2021 was about $1.463 trillion ($900 billion for Medicare and $532 billion for Medicaid, the rest is CHIPS plus administration) which seems to be in agreement with the Wikipedia page. Shame it does not have a link to the actual data, only the history of the bill. I doubt that it would have increased by $1 trillion by 2022 in order to be in agreement with the USASpending. The 50 states contribution cannot be more than another $500 billion. The discrepancy is bigger for Medicare.

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  6. Jdoughtync

    Consider for a moment what an honest, sober "state of the union" exchange of addresses from each side might have contributed to the public's understanding of this issue.

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  7. Jdoughtync

    But but but but... Joy Reid assured me 48 breathless, screeching times that all of this is "NOT TRUE!"

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    Dlyons

    Last 2 paragraphs says it all.
    Overreach is being acted upon, not just talked about, with crazy programs related to student loans and electric vehicles.

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  9. Ben Kissling

    The one thing most likely to destroy our entire country and the economic miracle we all experience every day, and nobody cares.

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    Jfreif

    This is the stuff that keeps me awake at night much more than culture war BS -- there is absolutely no political will in either party to address the knife's edge we walk economically. Wander into any bankruptcy courtroom and you will see the universal human experience that too much debt and profligacy will always, every time, catch up with you.

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    1. Jack H Wolf

      I am against accruing debt for moral reasons and because as opposed to the progressive modern monetarists, I dont believe that debt cannot have consequences anymore than that money goes on trees. Where I do agree with them is that we are not in any great crisis. It makes me no less opposed to debt, but realistically there is no immediate threat to the economy, we just will be paying more interest as old low yielding treasuries are replaced with higher interest new ones.

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