The Trump administration’s response, essentially, is to take credit for the booming economy and cite it as a reason not to worry about the two biggest entitlement programs in the federal budget. “The Administration’s economic agenda — tax cuts, regulatory reform, and improved trade agreements — will generate the long-term growth needed to help secure these programs and lead them to a more stable path,” Treasury Secretary Steven Mnuchin said in a statement. That’s what he would say, given that fiscally irresponsible Republican policies, those ballyhooed tax cuts included, will add $1.6 trillion to the federal deficit over the next 10 years, according to the Congressional Budget Office.
When, inevitably, the United States does not grow its way out of this problem, revenue will have to be raised, and Social Security and Medicare may face sudden, sharp cuts along with other worthy programs: defense, research, infrastructure. A brutal politics of austerity will ensue. In our aging society, all of that will have to occur in the context of a growing ratio between retirees and the working-age population.
We don’t want to exaggerate the risks. Social Security and Medicare probably will never run out of money, in the sense that no Congress or president would let benefit checks be cut. Politicians would pay them from general revenue
and federal borrowing even after the trust funds, which are essentially bookkeeping devices, went to zero. What’s more, there may be pleasant surprises in the future, if not the panacea Mr. Mnuchin predicts. For example, fewer new disability claims have been registered in recent years than previously expected, so the Social Security trust fund for that portion of the program will not be depleted until 2032, rather than 2028.
Still, the trust-fund estimates are useful as rough early-warning systems, and politicians of both parties have been ignoring them for years, even before President Trump and the current Republican Congress took office. The sensible approach to this long-term challenge would be to close the gap between federal revenue and federal spending commitments. The way to do that is to legislate modest reforms to the entitlement programs along with higher taxes (including Social Security payroll taxes) for those most able to afford them. Unfortunately, Mr. Trump’s addition to Republican ideology was to commit the party to never doing either of those things.