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Over the past few months, the Editorial Board has been doing what lawmakers haven’t: pulling together a plan to stabilize the national debt. In editorial after editorial, the board has laid out its ideas for spending cuts and revenue boosts.
It hasn’t been particularly fun. The board’s discussions were difficult, it writes in a final reflection on the exercise, and readers’ reactions were “frequently critical and at times vitriolic.”
But every look at the numbers reaffirmed the plan’s necessity: “The federal debt is on course to rise from 98 percent of gross domestic product at present to 115 percent by 2033,” nine points higher than ever before.
That’s approaching the territory of debt ratios in nations such as Japan, where growth has been painfully sluggish for many years.
The good news, as the board wrote at the outset, is that many cuts and tax hikes can happen without “massive sacrifice.” The country could even see some improvements along the way — a safer military and greater Social Security benefits for the poorest Americans.
This week marks the end of the series, and in this special edition of the newsletter, we’ll review the whole shebang.
Take a look, and agree, or not. And if you happen to see fit, forward it to your congressional representatives. They could use the help.
1. Social Security
The board dove in with the ultimate taboo, reasoning that despite Social Security’s enjoyment of “near-sacrosanct political status,” its massive share of the federal budget means that reform has to be on the table.
Moreover, its price is rising like crazy — set to nearly double by 2033.
What the board proposes is a broadening of the amount of income the Social Security tax is levied on; a gradual increase of the full retirement age to keep up with rising life expectancy; and a decrease in how much very-high-income households receive in benefits … while increasing what low-income homes get.
Not “entirely painless,” it writes, but “reasonable.” Of course, it’s all a political nonstarter right now — but that just shows “that bipartisan consensus and sound policy are two very different things.”
2. Medicare
The board ripped the rest of the Band-Aid off by tackling the equally untouchable Medicare next. One easy fix jumped out straight away: That Band-Aid, or really any medical care, would cost way more at a hospital than at a doctor’s office. Eliminating the cost discrepancy for equivalent procedures would save billions.
Medicare Advantage, which costs more per patient than traditional Medicare, is also due for a rethink, the board writes, as is Medicare’s grant program that helps teaching hospitals pay for graduate medical education.
And leaving hospitals on the hook for more of their “bad debt” from patients’ unpaid medical bills seems reasonable, given that Medicare covers more than half of it.
3. Veterans’ benefits
In one of the most polarizing points of its plan, the Editorial Board focused on the disability payments veterans receive after their service ends, often for the rest of their lives.
In many cases, the board explained, the old disability ratings are out of step with a modern economy less reliant on manual labor; plenty of veterans with minor impairments are able to find gainful, even lucrative employment and don’t really need the benefits.
Means-testing or taxing the benefits could be fruitful, and, at the very least, modernizing the rating system to save money is essential.
“If we owe our veterans every support,” the board wrote, “we also owe them a measure of fiscal responsibility.”
Chaser: This installment garnered a ton of reader responses, and their message was clear: Don’t touch veterans’ disability benefits.
4. Farm subsidies
Veterans tend to be doing all right, but you know who’s doing amazing? Farmers.
America’s farms are making plenty of food and even more money; net farm income this year is on track to hit a historically very high $137 billion.
“In other words,” the Editorial Board writes, “there’s no need for the United States to maintain its expensive agricultural safety net, whose origins lie in the long-ago Great Depression.” Its regulations and subsidies are intelligible only to insiders, and its benefits disproportionately go to the richest farmers.
So implement income limits, scale back crop insurance and scrap direct supports for commodities such as corn and soybeans, and farmers will still be fine.
5. The defense budget
Defense spending is one of those areas that lawmakers pour money into unquestioningly. Heck, the Pentagon gets money every year it didn’t even ask for! Sometimes $60 billion it didn’t ask for!
Instead, the board writes, Congress should step back and ask, “How do we ensure our military is best prepared for whatever comes?”
The answer, pleasantly, lines up with a lot of savings — safer for cheaper. This editorial is chock-full of suggestions, but among the top proposals are prioritizing (safer! cheaper!) uncrewed systems over crewed ones; maintaining existing materiel over buying new stuff; and swapping many uniformed jobs that don’t involve deployment to civilian posts.
6. Discretionary spending
Now this is the area of spending politicians love to talk about cutting, even though it’s responsible for only a small chunk of the deficit. Still, every penny (or billion pennies) counts, so the board identified reasonable cuts in the nondefense, nonentitlement bucket, too.
In addition to those farm bill trims, the board recommended, among other things:
- Cutting other subsidies to corporations, especially the fossil fuel industry
- Allowing enough federal remote work to offload government property and leases
- Shifting some Medicaid administration costs to the states
And, at the time of this editorial’s publication, the board suggested ditching President Biden’s student loan forgiveness program. Looks like the Supreme Court was a fan!
7. Revenue increases
At last, the fun stuff — making more money! … Apologies, I’m receiving word this comes in the form of paying taxes.
“No one likes to pay higher taxes,” the board allows, but cutting spending alone won’t stabilize the debt. It explains that more taxes are necessary, but they can be targeted and modest.
To start, up the estate tax, because nobody needs to be passing $13 million tax-free to heirs. Next, close the “carried interest loophole” that lines hedge fund managers’ pockets, and perhaps eliminate the state-and-local tax deduction, another favorite of the well-to-do.
And, yes, Biden should let expire the tax cuts President Donald Trump signed in 2017 — including their shocking drop of the corporate income tax rate.
Finally, after all this uncomfortable, un-fun budget-cutting and revenue-raising, a carbon tax could bring in a little more with the bonus of providing a livable world in which to enjoy the fruits of our frugality.
***
So that’s it — a plan to put the economy on a glide path to at least not-crisis. I’m sure there are things in there you didn’t like. (There are things in there I didn’t like!)
The point is, stabilizing the United States’ national debt will be hard and unpopular. But that doesn’t mean it shouldn’t be done. Because you know what would be even more hard and unpopular?
Ask Japan.
It’s a goodbye. It’s a haiku. It’s … The Bye-Ku.
Pinching one’s pennies
Though painful in the moment
Need not leave a scar
***
Have your own newsy haiku? Email it to me, along with any questions/comments/ambiguities. I’ll be off for the next few days (no, not Chuuk … yet), covered once again by senior editor Amanda Katz. See you when I’m back!