Donald Trump is often described as an “unconventional” candidate. When it comes to the federal budget, however, his campaign promises are entirely too conventional.
Some candidates deny the necessity of reforming popular entitlement programs such as Medicare and Social Security.
Some candidates propose enormous tax cuts without credible proposals to cut enough spending to prevent this from worsening the debt.
Donald Trump is often described as an “unconventional” candidate. When it comes to the federal budget, however, his campaign promises are entirely too conventional.
Some candidates deny the necessity of reforming popular entitlement programs such as Medicare and Social Security.
Some candidates propose enormous tax cuts without credible proposals to cut enough spending to prevent this from worsening the debt.
Some candidates make exaggerated claims for how much waste, fraud and abuse they will cut and how much savings that would achieve.
Some candidates make exaggerated claims for the economic growth their policies will produce.
The Republican front-runner, however, does all of the above — while simultaneously promising to somehow balance the budget.
Let’s begin with Social Security and Medicare. These two important programs already comprise nearly 40 percent of the federal budget and are the biggest contributors to projected spending growth aside from interest on the debt.
According to the programs’ trustees, “Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing. Lawmakers should take action sooner rather than later to address these structural shortfalls.”
The reasons are clear, as explained by the trustees: “Both Social Security and Medicare will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment and, in the case of Medicare, to growth in expenditures per beneficiary exceeding growth in per capita GDP.”
None of this seems to concern Trump. He has vowed that if he were elected there would be no changes to address the structural shortfalls that alarm the trustees.
At the same time, Trump has suggested a spending freeze for the federal budget. This would not be as easy as it sounds, particularly without touching Social Security and Medicare.
Imposing a four-year freeze on non-interest spending beginning in 2017 would require eliminating the $1.4 trillion spending increase projected through 2021. Most of that increase, roughly $1 trillion, comes from Social Security and Medicare.
That’s because, as the Trustees note, Social Security and Medicare will grow automatically with increased numbers of beneficiaries and higher health care costs per beneficiary.
In theory, the cuts could come from other spending but cannibalizing the rest of the budget would still leave Social Security and Medicare on an unsustainable track unless substantial new revenue were to be raised to pay for all promised benefits.
The Social Security and Medicare Part A payroll taxes are already inadequate to pay for current benefits, let alone promised benefits in the future. Medicare Parts B and D are mostly funded out of general government revenues and the toll will increase in the coming years.
That leads to Trump’s pledge to enact “big league” tax cuts.
No official estimates exist, and some details of his plan are vague. But the conservative Tax Foundation has found that Trump’s tax-cut plan would reduce revenues by about $12 trillion over 10 years on a “static” basis, meaning without estimating the economic feedback of lower tax rates.
Trump promises very positive economic feedback. However, when the Tax Foundation applied a “dynamic” analysis to his plan, assuming very positive economic feedback, the government would still lose $10 trillion in revenue.
Trump also asserts that the potential revenue loss would be offset by closing loopholes that benefit the rich. It’s a good idea in theory. But because he has mostly failed to specify what loopholes he is referring to, there is no way to evaluate this claim. He has been clear, however, that two of the largest and most popular tax breaks, deductions for home mortgage interest and charitable giving, would be untouched.
Aggressive spending cuts could mitigate the debt increase that Trump’s tax plan might cause. However, his basic suggestion in this regard is a general promise to go after waste, fraud and abuse.
Certainly elected officials should do whatever they can to make government more efficient, but over-promising on this is the oldest dodge in the book. Politicians rail against a legitimate target of public disgust while neither giving specifics that might upset anyone nor offering estimates of how much can realistically be saved.
There is no line item in the budget labeled “waste, fraud and abuse.” There is waste, of course, but rooting it out is often a difficult and subjective process. What’s waste to some people can be seen by others as a vital program.
In addition, even substantial savings from cutting waste, fraud and abuse would mostly provide one-time gains that would not alter the basic structural nature of our projected deficits.
In the end, Trump’s fiscal promises sound like those of a typical politician: He is explicit on the popular stuff, such as keeping entitlement benefits the same and cutting taxes, and vague on the unpopular stuff, such as paying for it all.
If Trump wants to break the mold and actually solve our nation’s fiscal challenges, he’ll have to do better than conventional platitudes.
This is the first in a series of Concord Coalition blog posts looking at the fiscal and economic proposals of prominent presidential candidates. The Concord Coalition does not endorse or oppose candidates or political parties.
