By John Ubaldi
Contributor, In Homeland Security
Congress often wraps itself in a bubble and pushes out public policy tot appeal to their constituents. Unfortunately, these policies have enormous consequences for the country. It appears that Washington is experiencing the failure to understand what has caused the rising national debt.
Defense Budget Likely to Increase and Further Aggravate National Debt
The ranking Democrat on the House Armed Services Committee Rep. Adam Smith, (D-WA), was asked whether the current defense budget was the correct figure and if future budgets would remain at that same level. His answer was an emphatic, “No and no.”
“I think the number’s too high,” Smith remarked, “and it’s certainly not going to [stay] there in the future.” The congressman argued that the federal debt and budget deficit require Washington to figure out how the federal government can get its spending under control, a chore made even more difficult by President Trump’s tax cuts.
But Smith and most political leaders fail to understand that the true driver of the nation’s debt and federal budget deficit is the rising cost of entitlement spending.
CBO Reports Causes of Rise in Federal Debt
In the days leading up to Donald Trump’s inauguration, the Congressional Budget Office (CBO) reported that in fiscal year 2016, the federal budget deficit increased in relation to the nation’s economic output for the first time since 2009.
The CBO projects that over the next decade, if current laws remain generally unchanged, budget deficits will follow an upward trajectory. This trajectory will be due to growing expenditures for retirement and health care programs targeted at older people, rising interest payments on the government’s debt, and only modest growth in revenue collections.
The CBO followed up with another report in June. This report predicted that over the next 30 years, spending as a share of the U.S. Gross Domestic Product (GDP) would increase for Social Security, major health care programs (primarily Medicare) and interest on the government’s debt.
The Trump tax cuts, which many people attribute to the rise of the federal debt and budget deficit, have never taken into account their impact on the increase in economic output. This increase has empowered businesses to grow the economy through increased job creation and business investments, which add revenue to the federal treasury.
Trump Plans to Overhaul Federal Government Agencies
As we enter the mid-term election cycle, both Republicans and Democrats have not adequately addressed the national debt or the budget deficit. However, the Trump administration has taken the first step in overhauling federal spending by releasing a blueprint for a massive overhaul of the federal government that touches every federal agency.
“This effort, along with the recent executive orders on federal unions, are the biggest pieces so far of our plan to drain the swamp,” Office of Management and Budget Director Mick Mulvaney proclaimed in a statement. “The federal government is bloated, opaque, bureaucratic and inefficient,” he claimed.
Trump to Merge Government Agencies
One of the more controversial aspects of the president’s reorganization plan is to merge the current Education and Labor departments into one agency. Also, the Supplemental Nutrition Assistance Program (commonly known as food stamps) would be moved from the Department of Agriculture to the Department of Health and Human Services (HHS).
To reflect the change from one federal agency to another, the word ”welfare” would be somewhere in HHS’s new title. Until 1979, HHS was the Health, Education and Welfare Department.
The last time the federal government passed a reorganization plan was in the months following the September 11, 2001, terror attacks. The Department of Homeland Security was created to improve national security by consolidating 22 separate and mostly security-related government agencies into one massive department.
Trump’s vast reorganization plan looks highly unlikely to pass because the administration needs Congress’s approval to enact it. In today’s hyper-partisan political environment, that plan could be dead on arrival.
However, the Trump administration has not put forward any plan to reform entitlement spending. Trump also has not addressed what the CBO cited as the true cause of the rise of the national debt and federal budget deficit: entitlement spending.
Democrats’ Expansion of Entitlement Programs
As for the Democrats, they have been campaigning on what Congressman Smith cited as his party’s notion of the real cause of rising national debt and budget deficits: the Trump tax cuts. However, an unacknowledged aspect of the CBO report focused on the sharp rise in entitlement spending and cited Social Security, Medicare, Medicaid and healthcare expenditures as possible causes.
As Democrats campaign in the mid-term elections, some of their candidates advocate another expansion of entitlement spending with calls for “Medicare for all.” Both the Mercatus Center at George Mason University and the Urban Institute conclude that it would cost the federal government $32 trillion (a 232.7 percent increase) between 2017 and 2026 to implement a “Medicare for all” program.
Washington needs to confront entitlement spending as the root cause of the national debt. Until it does, the United States will face consequences that could become devastating for our country.