The Trump administration’s budget has gotten a frenzy of attention for the programs it would cut, from Medicaid and food stamps to public broadcasting and arts subsidies. What is more noteworthy is what it leaves alone — the programs that are mostly responsible for the huge and ever-growing federal budget.
If you want to bring spending and deficits under control, you have to find savings in the two biggest and most popular domestic programs: Social Security and Medicare. They account for nearly 40 percent of all spending, and they are among the fastest-growing items in the federal budget.
Let them keep growing, and other measures don’t make much nearly as much difference as you might think. By 2027, the annual savings from all of Donald Trump’s proposed cuts in nondefense discretionary programs “would merely finance 33 days of Social Security and Medicare spending,” says budget analyst Brian Riedl of the conservative Manhattan Institute.
So actually, the time to make changes in these programs is not now. It was years ago. Everyone knew that the inevitable retirement of the baby boom generation, which began in 2008, would place unprecedented strains on these programs. Had modest reforms been adopted earlier, federal obligations would be significantly smaller than they have become.
But in the 1990s, when the government was flush with cash, and in the early 2000s, when there were two wars to finance, it was easy to put off dealing with this problem until later. Well, it’s later, and the taxpayers of 2017 are stuck with the results of decisions made — or not made — back then.
And it turns out the current president is no gutsier than the last. Five days before he took office in 2009, President-elect Barack Obama memorably pledged to the Washington Post Editorial Board that he would act to reform Medicare, which he called “unsustainable,” and Social Security: “We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s. … You have to have a president who is willing to spend some political capital on this. And I intend to spend some.”
In eight years, he never did. And Candidate Donald Trump gave every indication that he would be every bit as irresponsible. His proposed budget for the next fiscal year suggests that, whatever his difficulty with absolute truth in other contexts, in this act of negligence he’s good for his word.
While there isn’t much that can be done to trim outlays immediately without betraying commitments to today’s retirees, there are steps that could be taken that would put their budgets on a more sustainable path.
The most obvious option for Social Security is changing the formula for annual cost-of-living adjustments (which many experts say overcompensates for the effects of inflation) and eliminating the cost-of-living adjustment for high-income retirees. Those changes would reap considerable savings while protecting the buying power of the beneficiaries who most depend on Social Security. Those tweaks also would give young Americans some hope that they, too, someday can collect from a program that, since 2010, has been spending more money than it takes in.
Medicare is a more complicated challenge. The good news last year from the program’s trustees was that “per-enrollee Medicare spending growth has been low, averaging 1.4 percent over the last five years, slower than GDP per capita (2.9 percent) and overall health expenditures per capita (3.4 percent).”
That provides a bit of breathing room. More important, it suggests that meaningful economies can be achieved without inflicting hardship on seniors. The Committee for a Responsible Federal Budget has assembled a package of reforms intended to improve incentives and boost efficiency. If they work as hoped, they would not only reduce expenditures but yield better care.
It would have been easier to tackle these problems before things got so bad. But guess what: It’s a lot easier to do it today than it will be tomorrow.