Without raising taxes or cutting benefits
The national debt will soon reach all-time high share of GDP, due to the growth of spending on Social Security and Medicare. But both Donald Trump and Kamala Harris oppose cutting these programs’ benefits, while neither support tax increases sufficient to avert rising debt.
Tax increases or benefit cuts are typically cited as necessary to avert a fiscal crisis. But this is not strictly true. Federal revenues are in fact projected to expand more than eligibility for entitlements. Rather, exploding entitlement costs, and thus the broader problem of federal deficits and debt, is entirely due to scheduled increases in the generosity of benefits.
The Congressional Budget Office estimates that, under current law, federal spending on just Social Security and Medicare will increase by 2.9% of GDP over the next 30 years, while revenues will rise by only 0.9% of GDP. Coupled with an existing primary deficit of 2.5% of GDP and rising debt interest payments, major reform is necessary.
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Chris Pope is a senior fellow at the Manhattan Institute. Follow him on Twitter here. Andrew G. Biggs is a senior fellow at the American Enterprise Institute.
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