That may be unfortunate for incumbents, but it could be really bad for Americans everywhere.
Perhaps “doomsday” isn’t the appropriate word to describe the likelihood of a coming recession, especially one that many economists say will be short and relatively mild, according to the Wall Street Journal.
And the recession probably won’t begin on Election day. The collision course is more philosophical. But it involves philosophies that desperately need to be front and center in current campaigns for the House and Senate.
Unfortunately, they aren’t.
But try getting a specific remedy out of them.
The national debt just passed $31 trillion, but it generated less excitement than a recap of baseball scores on a July afternoon. No excitement, that is, but plenty of interest, as in the interest payments on that debt that are rising along with interest rates increases imposed by the Federal Reserve.
As Washington Post columnist Allan Sloan put it recently, the bill from all that Covid spending — stimulus checks, business loans that didn’t have to be paid back, etc. — is coming due. “Total interest payments on the government’s debt could come in at nearly $580 billion this fiscal year, up from $399 billion in recently-completed fiscal 2022,” he wrote. Then he put it in perspective.
“That would bring the total interest cost in 2023 to roughly the same level as the federal government’s 2022 budget for Medicaid.”
And that doesn’t begin to touch the principle on that debt.
Solutions to this problem aren’t complicated. The Committee for a Responsible Federal Budget reported on a recent letter to Congress, signed by 55 budget experts, ranging from former members of Congress to economists, said, “There was a strong case for borrowing earlier in the Covid-19 pandemic … . However, that time has passed.”
Reducing the deficit, they said, “could come from reducing spending, lowering health care costs, raising taxes, or some combination.”
No magic there. Spend less or bring in more. And, I would add, try to go beyond erasing the deficit and actually pay down the national debt, so those interest payments stop eating into the economy.
So, which will it be, candidates? Do you want to raise taxes or cut programs, or both? And if you say cut programs, tell us which ones, and how. And remember, you can’t get serious about it without talking about Social Security and Medicare, two programs on autopilot with a course set for disaster.
Trustees for the two programs say the fund that pays for retirements and survivor benefits will be in trouble by 2034. Medicare Part A, the in-patient hospital benefits program, is good only through 2028. Something should be done now.
Americans, when asked, tend to agree. They also can agree, remarkably, on some solutions.
A survey by the University of Maryland’s Program for Public Consultation found seven things most Republicans and Democrats will agree to do to save Social Security.
I’ll list only the first three. First, raise the payroll cap on Social Security. Currently, those taxes are applied only up to $147,000 in income. Raising it to $400,000 would erase 61% of the fund’s shortfall, and the survey found 88% of Democrats and 79% of Republicans favoring it.
Second, increase the Social Security payroll tax from 6.2% to 6.5%, which would chop off another 16% of the shortfall. That had 78% support from Democrats and 70% from Republicans.
Third, reduce Social Security benefits for the top 20% of earners. That would reduce the shortfall by another 11%, and it has 86% support from Democrats and 78% support from Republicans.
Similar ideas could be raised for saving Medicare, but none of these can happen without both sides of the aisle making compromises — compromises that might, if presented right, have widespread public support.
The Wall Street Journal said economists now put the probability of a recession within the next year at 63%. I can think of a lot of jokes about economists and their predictions. But really, a looming recession isn’t the big problem facing America. It’s that reckless spending, and it’s a product of both political parties, and the long-term math just doesn’t work.
The least candidates can do, before we all fill in our ballots and send them in, is address the topic and tell us, specifically, what they intend to do about it and how, realistically, they intend to enact their plan.