I’ve been thinking for the last month about how to respond to what’s going on in our country right now, especially in regard to the emphasis on reducing federal spending. If the current administration in Washington, D.C., is taking actions to cut government spending and rein in our federal annual deficit of $1.9 trillion out of a sincere belief that something must be done, they are certainly going about it in the wrong way.
Firing thousands of federal workers will have little impact on our federal budget; in fact, if 1/4 of all federal employees were fired, it would have a $90 billion, or 1.2% impact on the federal government’s budget. Just for a little perspective, the United States government’s annual budget is about $7 trillion. Of that amount, we are borrowing $1.9 trillion a year to finance government departments and initiatives. Laying people off and cutting back government programs like USAID, the Farm Service Agency, National Park Service, Postal Service, FEMA, and Centers for Disease Control is only nibbling at the edges of the problem.
The debt service on our national debt, which is the amount the government owes for all of the annual deficits that it has stacked up over the years under both Democratic and Republican administrations, is now over $1 trillion per year. That is more than we spend on national defense, $884 billion, and Medicare, $936 billion. In fact, it is more than we spend on anything other than Social Security, $1.5 trillion. I know of virtually no one who wants to cut those programs because so many people depend upon them. While there is no doubt that there are other programs within some agencies that many people feel are unnecessary, even cutting those will have minimal impact on our annual deficit.
But let’s look at what could be done. The tax breaks that our president wants to extend, primarily to the ultra-wealthy, cost our country $600 billion per year or $6 trillion over 10 years in lost revenue. If the breaks were not allowed to renew by action that must be taken by Congress, that would reduce our annual deficit by 1/3. So let’s consider the other big drivers of the annual deficit: Social Security, Medicare, and Medicaid.
First of all, Social Security under its current form will have to reduce benefits by 23% starting in 2031. This is due to the huge baby boomer population retiring and also because fewer people are working to pay into Social Security. Automation has reduced the number of workers required in higher-paying manufacturing jobs, and so many individuals in the service industry in lower-paying jobs do not pay as much into Social Security, which is 6.25% of their wages. The current administration’s belief that tariffs, or taxes, on foreign goods entering the U.S. will cause companies to bring high-paying industrial jobs back to the United States is at best a long-term solution, if in fact, it would ever work.
Without getting into too much detail, there are ways to improve Social Security’s solvency, including raising the minimum qualifying age, reducing benefits for wealthy individuals, and requiring both individuals and businesses to pay a higher percentage into the Social Security fund.
As far as Medicare is concerned, increasing the percentage that individuals pay into Medicare before they reach age 65, as well as allowing the government to negotiate lower prices for more prescription drugs, which the pharmaceutical industry will no doubt continue to strongly oppose, would greatly reduce the Medicare deficit. Medicaid is an entirely different issue, and many people believe that there is a lot of fraud in this program, however, it should be noted that over 90% of the people on Medicaid are working, but their incomes are so low that they qualify for this assistance. Cuts to federal Medicaid funding would result in a reduction in benefits for qualifying individuals or a sizable increase in the individual state governments’ Medicaid contributions.
Our Congressman, Brett Guthrie, in his new role as chair of the Energy and Commerce Committee, has been tasked with trying to reduce the annual federal deficit by $880 billion over 10 years. However, the latest proposal approved by the House of Representatives and Senate would increase the federal debt by $7-9 trillion over 10 years. As I hope you can see by now, the only way to improve our nation’s financial well-being is through a huge reduction in programs that the American people depend upon, or by increasing revenue. Congress has continually refused to fully acknowledge and address the fact that we are spending much more than the government collects in tax revenue. The American people deserve an honest conversation that we are going to have to start paying more for what we want. Despite what many people believe, economic growth alone will not solve this problem.
I would like to challenge Representative Guthrie to truthfully address this issue and work for long-term solutions to these problems. Representative Guthrie has worked for years to obtain the level of influence that he now has in Congress, and yet I know it will be difficult for him to defy house leadership and work for other solutions than drastically cutting essential programs. However, I have no doubt that the people of the second congressional district in Kentucky, who both respect and trust him, would support him in his sincere efforts to work for long-term solutions to these daunting financial issues.
Written by
Bruce Kunze
