Are Entitlements to Blame for Federal Deficits?

Senate Majority Leader Mitch McConnell blamed rising federal deficits and debt on a bipartisan unwillingness to contain spending on Medicare, Medicaid, and Social Security, and said he sees little chance of a major deficit reduction deal while Republicans control Congress and the White House.

“It’s disappointing, but it’s not a Republican problem,” McConnell said Tuesday in an interview with Bloomberg News when asked about the rising deficits and debt. “It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.”

McConnell’s remarks came a day after the Treasury Department said the U.S. budget deficit grew to $779 billion in Donald Trump’s first full fiscal year as president, as a result of the GOP’s tax cuts, bipartisan spending increases, and rising interest payments on the national debt. That’s a 77 percent increase from the $439 billion deficit in fiscal 2015, when McConnell became majority leader.

McConnell said it would be “very difficult to do entitlement reform, and we’re talking about Medicare, Social Security, and Medicaid,” with one party in charge of Congress and the White House.

“I think it’s pretty safe to say that entitlement changes, which is the real driver of the debt by any objective standard, may well be difficult if not impossible to achieve when you have unified government,” McConnell said.

Shrinking those popular programs without a bipartisan deal—either by reducing benefits or raising the retirement age—would risk a political backlash in the next election. Trump promised during his campaign that he wouldn’t cut Social Security, Medicare, or Medicaid, even though his budget proposals have included trims to all three programs.

McConnell said he had many conversations on the issue with former President Barack Obama, a Democrat. “He was a very smart guy, understood exactly what the problem was, understood divided government was the time to do it, but didn’t want to because it was not part of his agenda,” McConnell said.

“I think it would be safe to say that the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue, and it’s a shame because now the Democrats are promising ‘Medicare for all,”’ he said. “I mean, my gosh, we can’t sustain the Medicare we have at the rate we’re going, and that’s the height of irresponsibility.”

McConnell said the last major deal to overhaul entitlements occurred in the Reagan administration, when a Social Security package including an increase in the retirement age passed under divided government.

He also said he was the GOP Senate whip in 2005 when Republican President George W. Bush attempted a Social Security overhaul and couldn’t find any Democratic supporters. “Their view was, ‘You want to fix Social Security, you’ve got the presidency, you’ve got the White House, you’ve got the Senate, you go right ahead,’” McConnell said. The effort collapsed.

Other Drivers of the Deficit

The Office of Management and Budget has projected a deficit in the coming year of $1.085 trillion, despite a healthy economy. And the Congressional Budget Office has forecast a return to trillion-dollar deficits by fiscal 2020.

During Trump’s presidency, Democrats and Republicans agreed to a sweeping deal to increase discretionary spending on defense and domestic programs, while his efforts to shrink spending on Obamacare mostly fell flat.

In December 2017, Republicans also passed a tax cut projected to add more than $1 trillion to the debt over a decade after leaders gave up on creating a plan that wouldn’t increase the debt under the Senate’s scoring rules. At the time, McConnell told reporters, “I not only don’t think it will increase the deficit, I think it will be beyond revenue-neutral.” He added, “In other words, I think it will produce more than enough to fill that gap.”

Senate Minority Leader Chuck Schumer of New York responded Tuesday by saying McConnell and other Republicans “blew a $2 trillion hole in the federal deficit to fund a tax cut for the rich. To now suggest cutting earned middle-class programs like Medicare, Social Security, and Medicaid as the only fiscally responsible solution to solve the debt problem is nothing short of gas-lighting.”

House Minority Leader Nancy Pelosi of California said in a statement, “Under the GOP’s twisted agenda, we can afford tax cuts for billionaires but not the benefits our seniors have earned.”

From: Bloomberg

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