Will Elon Musk’s appointment to head a new Department of Government Efficiency (along with Vivek Ramaswamy) become political theater or a serious effort to stop a runaway debt train?
If it’s theater, the nation will remain on course to implode economically within 20 years or so. That’s when, according to the Penn Wharton Budget Model at the University of Pennsylvania, “no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly.”
If it’s theater, the nation will remain on course to implode economically within 20 years or so. That’s when, according to the Penn Wharton Budget Model at the University of Pennsylvania, “no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly.”
That report was published in 2023, so the clock is actually at 18 years and counting.
But if this is a serious effort, Musk and Ramaswamy will have to look Donald Trump in the eye and tell him he can’t do some of the things he’s promised.
For example, the nation can’t afford to exempt tips from income taxes. Trump promised a crowd in Las Vegas last June that he would do this. Kamala Harris later promised virtually the same thing. It’s a horrible bipartisan idea.
Yes, a lot of service workers already don’t report all the tips they received, and there is no way to document how much this happens. However, the Committee for a Responsible Federal Budget estimates this would reduce federal revenue by about $300 billion over 10 years, assuming the exemption would extend to payroll taxes for Social Security, as well.
More importantly, however, such an exemption would change the way businesses operate. “Actual revenue loss could be much higher to the extent it leads to increasing amounts of income being reclassified as tips,” the committee said. The cost could reach as high as $500 billion.
This is just part of a package of Trump promises the committee examined. Taken together, and weighed against the expected income from a planned increase in tariffs, Trump’s plan would
Increase debt by about $7.5 trillion above what currently is projected, it said.
That includes cuts to corporate taxes, increased costs for deporting undocumented aliens and securing the border, renewing the tax cuts from the first Trump administration, modernizing the military, ending the federal tax on Social Security benefits and the estimated savings from ending the Department of Education and eliminating waste.
Some tax cuts may stimulate economic growth to offset increased expenses, but the trend is definitely moving in the wrong direction.
So, who is going to have a serious discussion with the president about ideas that will have to end up on the cutting board? Are Musk and Ramaswamy up for that? Or will the effort focus on things like bitcoin reserves and government regulations only?
And, lest you think I’m picking on Republicans only, consider this: Who will have the job of convincing Democrats they must join in the chorus for serious reforms to Social Security and Medicare?
One man, Utah’s new Senator-elect John Curtis, recently told the Deseret News editorial board he has volunteered to be the “tip of the spear” on both of those entitlement programs.
Another Utahn, Rep. Blake Moore, will sit on the House Ways and Means and Budget committees. In an interview nearly two years ago, he told me he is committed to reducing the federal budget deficit. At the time, the national debt stood at $31.4 trillion. As I write this, it now is approaching $36.3 trillion.
But can this resolve overcome the demagogues who are bound to cast any reforms as attacks on the elderly or a breach of promise to American workers? To many lawmakers, few things are more important than getting re-elected. A catastrophe 18 years away seldom seems as important as bad publicity today.
Americans had better hope that isn’t true this time. And they had better hope that real cuts, deep and meaningful, carry the day.
As columnist Ingrid Jacques wrote for USA Today, Argentinian President Javier Milei has set a good example through austerity and free-market measures that have pulled his nation out of inflation and stagnation.
“Of course, the necessary cuts to get inflation and the economy under control aren't popular with everyone,” she wrote. “There is short-term pain.”
And short-term pain isn’t a winning campaign promise for any politician, especially at a time when most economic indicators are good.
Four years ago, I wrote that Republicans had lost their moral authority on debt issues after the first Trump administration. This could be a chance to regain what was lost.
Yes, a lot of people are concerned that Musk and Ramaswamy are unelected influencers with too much power. It’s a compelling argument, except that the final word still belongs to the elected representatives. They appropriate money and set tax rates.
Also, none of the critics is articulating a viable Plan B for turning the debt train around. That simply is not acceptable.
But if this is a serious effort, Musk and Ramaswamy will have to look Donald Trump in the eye and tell him he can’t do some of the things he’s promised.
For example, the nation can’t afford to exempt tips from income taxes. Trump promised a crowd in Las Vegas last June that he would do this. Kamala Harris later promised virtually the same thing. It’s a horrible bipartisan idea.
Yes, a lot of service workers already don’t report all the tips they received, and there is no way to document how much this happens. However, the Committee for a Responsible Federal Budget estimates this would reduce federal revenue by about $300 billion over 10 years, assuming the exemption would extend to payroll taxes for Social Security, as well.
More importantly, however, such an exemption would change the way businesses operate. “Actual revenue loss could be much higher to the extent it leads to increasing amounts of income being reclassified as tips,” the committee said. The cost could reach as high as $500 billion.
This is just part of a package of Trump promises the committee examined. Taken together, and weighed against the expected income from a planned increase in tariffs, Trump’s plan would
Increase debt by about $7.5 trillion above what currently is projected, it said.
That includes cuts to corporate taxes, increased costs for deporting undocumented aliens and securing the border, renewing the tax cuts from the first Trump administration, modernizing the military, ending the federal tax on Social Security benefits and the estimated savings from ending the Department of Education and eliminating waste.
Some tax cuts may stimulate economic growth to offset increased expenses, but the trend is definitely moving in the wrong direction.
So, who is going to have a serious discussion with the president about ideas that will have to end up on the cutting board? Are Musk and Ramaswamy up for that? Or will the effort focus on things like bitcoin reserves and government regulations only?
And, lest you think I’m picking on Republicans only, consider this: Who will have the job of convincing Democrats they must join in the chorus for serious reforms to Social Security and Medicare?
One man, Utah’s new Senator-elect John Curtis, recently told the Deseret News editorial board he has volunteered to be the “tip of the spear” on both of those entitlement programs.
Another Utahn, Rep. Blake Moore, will sit on the House Ways and Means and Budget committees. In an interview nearly two years ago, he told me he is committed to reducing the federal budget deficit. At the time, the national debt stood at $31.4 trillion. As I write this, it now is approaching $36.3 trillion.
But can this resolve overcome the demagogues who are bound to cast any reforms as attacks on the elderly or a breach of promise to American workers? To many lawmakers, few things are more important than getting re-elected. A catastrophe 18 years away seldom seems as important as bad publicity today.
Americans had better hope that isn’t true this time. And they had better hope that real cuts, deep and meaningful, carry the day.
As columnist Ingrid Jacques wrote for USA Today, Argentinian President Javier Milei has set a good example through austerity and free-market measures that have pulled his nation out of inflation and stagnation.
“Of course, the necessary cuts to get inflation and the economy under control aren't popular with everyone,” she wrote. “There is short-term pain.”
And short-term pain isn’t a winning campaign promise for any politician, especially at a time when most economic indicators are good.
Four years ago, I wrote that Republicans had lost their moral authority on debt issues after the first Trump administration. This could be a chance to regain what was lost.
Yes, a lot of people are concerned that Musk and Ramaswamy are unelected influencers with too much power. It’s a compelling argument, except that the final word still belongs to the elected representatives. They appropriate money and set tax rates.
Also, none of the critics is articulating a viable Plan B for turning the debt train around. That simply is not acceptable.
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