(Michael Hogue)
Our presidential candidates are promising to spend money on all kinds of goodies. Former President Donald Trump has floated a baby bonus, historic levels of border security and more tax cuts, including ending taxes on Social Security and tips. Vice President Kamala Harris is promising five-digit housing credits, a ramped-up Child Tax Credit, small business tax credits and more clean energy investments.
Nonpartisan estimates for both candidates’ promises range in the trillions, which is not to say that all of these are bad ideas. Far from it. But I’ve heard much less about how to pay for this new spending or the drops in revenue from tax cuts. And as they say in economics, there’s no free lunch.
Now, to be sure, I’ve heard about some unicorn pay-fors, and by unicorn I mean make-believe. For example, massive income and wealth taxes on the rich will take care of it. Or tariffs will boost domestic production and raise wages and because of baby bonuses people will have more babies and we’ll grow our way out.
My 3-year-old daughter loves unicorns, especially pink sparkly ones. I recently learned on a trip to England that unicorns are a symbol of Scotland, where my ancestors came from, so now I’m on the unicorn bandwagon too. But there are not real unicorn pay-fors in the economy. More spending or less taxes comes with tradeoffs — tradeoffs that for too long our politicians have not been forthright about.
Opinion
Moreover, even if there were real pay-fors with respect to the new programs being proposed, that would do nothing for the unprecedented pile of debt that America is already sitting on. If that debt were a hole in the ground, the entire U.S. economy and all her GDP would fall into. Both Trump and Harris have arguably promised to make that hole much deeper by protecting programs that are bankrupt and on their way to bankrupting the country.
The budget — what no candidate wants to talk about — is the topic of this week’s episode of my new podcast with Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. In make-believe unicorn world with my daughter, we shut our eyes to see what’s real. In real-life, we need to open our eyes, even if it’s a little scary. And MacGuineas is an expert at opening eyes.
Here’s what the electorate should see about the federal budget: America is in uncharted territory. Our national debt is the size of our GDP, the entire economy. Social Security’s insolvency date is less than a decade away. Taxes are at record highs. And America already has arguably the most progressive tax code in the Organisation for Economic Co-operation and Development, something that the political left in particular seems to forget.
The country could eliminate the entire Defense Department, and that wouldn’t come close to paying out the money already promised. Congress could tax small businesses and upper-income families at 100% and that would not cover America’s bills.
There are tons of blame to go around. Is this the left’s fault, from their pandemic-spending and big government programs? Is it the right’s fault, from Trump’s tax cuts, or from military spending? The answer is all of the above. But all of those things account to only a third of government spending, and a share that’s shrinking at that.
The real driver of our federal budget problems is Social Security, Medicare, Medicaid and now interest payments on the debt. This is largely because the population in the U.S. is aging and we have fewer workers to support later-in-life benefits. It would be like keeping the same spending habits in your household if your spouse drops out of the labor force and your salary stays the same. There’s a fundamental mismatch.
Neither party has taken steps to fix these programs, commonly referred to as entitlements. Promising to protect these programs, as Harris and Trump are now doing, should really be promising to eliminate them. Only when these programs are addressed will the U.S. be on a sustainable path and able, in good faith, to promise new tax and spending programs that can last.
In my podcast conversation with Maya this week, we talk about how budget reform could happen. A bipartisan commission to address the debt seems like the best option in our polarized time. The last time we had a similar commission was more than a decade ago, and the final recommendations failed to get over the finish line. In the podcast, we talk about why that was, and what could be different this time.
As any household knows, it’s not just the money you spend and bring in, but how you make decisions about money — how frequently you have the dreaded conversation, what’s included in the conversation, what bills you never really consider. In essence, America is having the money conversation once a year and talking only about a tiny part of our spending. This would be like my husband and I talking about finances in the spring, but leaving out our house payment, health insurance, retirement savings and child care, and focusing on our food bill and Target runs. You get the point.
The good news is that budget reform can happen. The U.S. was running a surplus as recently as three decades ago. We’ve had grand compromises before that were a hair’s breadth away from passing. And whether you are Democrat or Republican, your candidate can do more to be fiscally responsible, meaning that this is not a partisan topic and there’s more work for everyone to do.
So when you hear promises for new spending or less revenue from the candidates, as a voter, don’t fall for the make-believe. There’s too much on the line.
Part of our opinion series The American Middle, this essay calls for bipartisan compromise on the federal budget.
A new episode of Beyond Talking Points: An American Middle Podcast will drop every Tuesday through Nov. 5. Listen at dallasnews.com/elections-24-podcast or on Spotify or Apple podcasts.
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