This week on Facing the Future, we heard from American University Professors Tom Kahn and Ron Elving on the first week of the Trump Administration and the budget battles predicted to lie ahead. To begin the show, Concord Coalition Chief Economist Steve Robinson discussed the Congressional Budget Office’s (CBO) newly released 10 year budget outlook. The daunting projections move the United States into uncharted deficit and debt territory.
A key projection from the report identifies shifting demographics and fertility rates as a concern for some of our biggest spending programs like Social Security and Medicare. “It’s sort of shocking to me,” said Robinson, “There’s what’s known as the level of fertility, and essentially as long as women have, on average over their lifetime, about 2.1 births the population would remain stable. It would neither rise nor fall, setting aside the question of immigration and changes in life expectancy. It’s neither rising nor falling, and that matters from a budget perspective.”
“If you have programs like Social Security and Medicare where you want to have workers supporting retirees, workers pay a payroll tax that goes toward funding the benefits of retirees. The more workers you have relative to the retirees, the smaller that burden is. Historically, there were about three workers for every retiree, and because of the baby boom and the decline in birth rates since the baby boom we’ve gone from about 3-to-1 to about 2-to-1. When you get in that situation of a declining replacement rate, the burden of funding Social Security and Medicare is magnified because you have fewer workers paying in relative to the number of beneficiaries.”
Later I was joined by Kahn and Elving, who both serve at the Center for Congressional and Presidential Studies at American University. They discussed President Trump freezing funds through executive orders and more.
Asked about how the current administration will deal with legal battles ahead as a result of impounding funds, Khan said “It will absolutely be a challenge in the courts, and there’s nothing in the Constitution that gives the President the power to impound. Congress has passed legislation, and it has been challenged in the courts several times, and the courts have upheld the Congressional Empowerment Act. But again, I think it goes back to something we were talking about earlier, which is this vast expansion of Presidential power in addition to impoundment. We saw in President Trump’s first term that he spent money that had not been appropriated by Congress for a different purpose. And he moved that money to the [border] wall. It’s the imposition of an enormous amount of authority by this executive. It will be challenged in the courts. I think there will be some limitations on that.”
On the topic of the Department of Government Efficiency (DOGE), Elving said, “They want to set something up that is not a commission, that is not a compromise group from Congress, such as we’ve seen in more recent years, but which would have real teeth and authority to step in [and] supersede the agencies, supersede the regular Congressional budget process, and just say, ‘No, we at DOGE have decided that that is not government efficiency.’ As we read the Constitution, Congress holds the power of the purse, so that’s an extraordinary assertion.” Elving concluded that, “It’s trying to put some kind of substance to this common theme of waste, fraud, and abuse, and test the theory of whether or not waste, fraud, and abuse can be sufficient to balance the Federal budget without cutting Social Security or defense, or anything else that people actually like.”
Hear more on Facing the Future. Concord Coalition Executive Director Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
