But the bad news starts now. In January the Congressional Budget Office issued its latest report on the federal budget, warning that the deficit is set to grow from $439 billion last year to $544 billion in 2016. Future increases will be steady. By 2026 the deficit will be $1.37 trillion. The cumulative deficit over the next decade will be $9.4 trillion.
The longer before Congress acts, the bigger the problem will become. Noted the agency: “waiting for some time before reducing spending or increasing taxes would result in a greater accumulation of debt, which would represent a greater drag on output and income in the long‐term.” Leaving all of us with less money to pay the higher federal bills.
Of course, these numbers presume that legislators act responsibly. Warned the Committee for a Responsible Federal Budget: “The budget outlook could be even worse than projected if lawmakers continue to pass legislation without truly offsetting its costs.” Which means the federal deficit and national debt likely will grow more rapidly than estimated by the CBO.
Unless Bernie Sanders is elected president.
Not because the Vermont Senator—who looks and talks like the proverbial crazy uncle who escaped from the locked basement where he normally lived—wants to spend less. Rather, he admits he wants to tax more.
The Sanders budget would be huge. “Free” health care. “Free” education. Endless benefits for everyone. He’s really a welfare state redistributionist rather than a traditional socialist, but who’s counting!?
Nevertheless, give him credit. At least he wants to pay for the federal goodies. He has proposed to increase inheritance taxes, add a payroll tax on employers, eliminate tax preferences for health benefits, hike income taxes across‐the‐board, and up the marginal rate on those making more than $250,000 annually.
No doubt his programs would be far more expensive than predicted. After all, he unrealistically imagines all sorts of efficiencies from his planned government health care takeover. Instead costs would explode in response to increased demand for “free” care. But no matter. He could be counted on raise taxes again. At least he wouldn’t follow George W. Bush’s path of spending (lots) more while cutting tax rates, creating a deficit explosion.
Indeed, Bush and the GOP Congress passed the long‐time Democratic proposal for a Medicare drug benefit. The Republicans, despite their vaunted reputation for fiscal probity, made no attempt to pay for their new program. Rather, they threw a wild budget party and said, put it on our, or more accurately the American people’s, tab.
Ironically, even Barack Obama and the Democratic Congress did better. They made some effort to cover the cost of ObamaCare. In fact, they engaged in fairly common DC‐style budget fraud—double-counting revenues, underestimating costs, etc. But they did that because they felt a vague obligation not to add more red ink.
Bernie Sanders is following suit. He ignores economic reality in assuming that having the government pay for everything would make everything cost less. However, he would forthrightly bill everyone for the benefits whether they want them or not. In contrast to most Republicans, he makes no claim of a free lunch. He appears to realize that federal expenditures and taxes are related. More of the first requires more of the second, unless you expect to borrow for perpetuity.
But as the latest CBO report demonstrates, that won’t work either. The deficit is expected to almost treble over the next decade. And that’s before the real entitlements tsunami hits. At some point the debt burden becomes unbearable, interest rates skyrocket, and creditors run for cover. Then the real fun in Washington begins.
We know how Bernie Sanders would deal with the problem. Just squeeze more cash out of people. How about everyone else?
What would they do to control the spending monsters of Social Security, Medicare, and Medicaid, which threaten to swallow everything else? Would they have America continue to act as the world’s policeman, underwriting prosperous, populous allies in Asia and Europe, remaking failed societies in the Middle East, and righting every supposed wrong overseas? Would they cut corporate welfare and other subsidies for dependent businesses? Would they stop mulcting the working class and subsidizing well‐endowed universities in the name of aiding college students?
And if the Republicans don’t want to reduce outlays, would they join Bernie Sanders in supporting tax hikes, really big ones if necessary, to stop deficit spending?
Politicians pander. It comes naturally to them. But voters can change that by asking difficult questions and insisting on honest answers, no matter how embarrassing. His policies may be awful, but at least Bernie Sanders doesn’t hesitate telling the truth about his budget plans. The American people should make the other candidates follow suit.