Deficits … who cares?

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WASHINGTON, DC: Just how far have budget deficits drifted off the radar screen of presidential politics? Here’s one indicator: Last week, the nonpartisan Congressional Budget Office (CBO) issued its annual “Budget and Economic Outlook” report — a detailed examination of White House and congressional policies — and hardly anyone paid heed. The inattention is striking because the report was full of sobering news.

Consider:
— Cumulative deficits over 10 years (2016 to 2025) are now projected at $8.5 trillion, up from a $7 trillion estimate in August. Federal debt held by the public — the total of all past deficits — is projected at $22.4 trillion in 2025; in 2016, it’s $13.9 trillion. By 2025, the debt would equal 84 percent of the economy (gross domestic product) compared with 74 percent in 2015. Many economists think the rising debt unsustainable.

— Almost half the spending growth over the decade comes from two programs — Social Security and Medicare. Much of the rest stems from other health programs (Medicaid, the Affordable Care Act) and from interest on the debt. The projected annual interest payments rise from $223 billion (1.3 percent of GDP) in 2015 to $772 billion (2.9 percent of GDP) in 2025. Meanwhile, other programs, from defense to the courts, are squeezed.

— The CBO believes the US economy will grow more slowly. Since World War II, the US economy has generally averaged 3 percent annual growth or better. Now, the CBO thinks realistic growth is around 2 percent. Part of the decline reflects retiring baby boomers leaving the workforce. The rest is something of a mystery. Regardless, slower economic growth squeezes tax revenues. It’s harder to service the debt.


It’s no secret why deficits are shunned. Take-away politics — raising taxes, cutting popular subsidies and handouts — is unfriendly. People deplore deficits, but they don’t deplore the programs and tax breaks that create the deficits. Plus, the budget numbers are mind-boggling. In 2016, the federal government will spend $3.9 trillion. Social Security is $910 billion. Numerous small programs cost a few billion. Ordinary people have a hard time getting a handle on these stupendous sums.

So the candidates evade. They pile expensive proposals atop existing deficits, as if they didn’t exist. Sen. Bernie Sanders wants to nationalize health care and make public college free. Hillary Clinton wants more spending for child care, clean energy and infrastructure. Donald Trump’s tax plan would cut government revenues by $9.5 trillion over its first decade, says the nonpartisan Tax Policy Center. Claims that these proposals would be “paid for” by either new taxes or spending cuts should be treated skeptically.

(c) 2015, THE WASHINGTON POST WRITERS GROUP

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3 Comments

  1. Henry Ford once said, “If the people ever find out how banks actually conduct their business, there will be a revolution in the morning.” If all the banks who provide this deficit spending were publicly owned, then all the benefits will go to the people. The problem is that these banks are all privately owned by you know whom, so all the benefits of deficit spending accrue only to these bankers, therefore its really only these shysters who are fleecing the people/borrowers who can legitimately say, who cares? Get it?

  2. Mariano Patalinjug on

    Yonkers, New York
    01 Feb. 2016

    Okay, so the amount to be “spent” on Social Security is $900 billion for 2016, according to this column by Robert J. Samuelson.

    What he does not mention is that the millions of Americans who are now in the work force weekly or monthly contribute 6.5% of their earnings with their employers forking over another 6.5% for Social Security and Medicare–for a total of 13% in FICA taxes. All of their contributions go into the Social Security Fund now administered by the Social Security Administration.

    Not in the equation is that the 50 million or so Americans who are now retired are are now drawing Social Security benefits contributed FICA taxes all their working years, and their total contributions are what is called the Social Security Fund, from which they are drawing their monthly pension benefits. It is thus not the case that the Congress has to appropriate $900 billion for Social Security benefits for 50 million retired Americans for the year 2016.All those retirees are just drawing pensions from what they contributed in FICA taxes all their working years.

    MARIANO PATALINJUG
    patalinjugmar@gmail.com

    • Frank A. Tucker on

      We WIST it were that simple Mr. Patalinjug. In the past until now the Congress had steadily drawn down the SS Fund and transferred that money into the General fund in order to balance the Congressional Budget.
      Those of us on SS due to retirement withdraw FAR more than our 6.5 + 6.5% (13% combined) contribution, add to that far more retirees are surviving far longer than expected and we are now outpacing the current contributing workforce, The SS Fund WILL be totally depleted by 2020 if something is not drastically changed before then.