If you want to see how dire the country’s fiscal problems have gotten, you need only look at statements made Wednesday morning by outgoing Starbucks CEO Howard Schultz:
“How are we going to pay for these things?” Schultz asked on CNBC’s "Squawk Box," discussing progressive Democratic priorities like universal health care and jobs programs. “I think we got to get away from these falsehoods and start talking about the truth and not false promises.”
Schultz, a centrist Democrat certainly not known for right-wing policies, was asking a question few in the Republican-controlled Congress seem willing to: Where is the money coming from? More practically, even if it’s worthwhile for the federal government to undertake various programs, do we have the ability to pay for them?
Increasingly, the answer seems to be “no,” when it comes to major programs that have existed for generations, not to mention the pie-in-the-sky progressive ideas that Schultz criticized.
On Tuesday, the Social Security and Medicare trustees released their annual reports on the health of the respective programs. Unsurprisingly, things do not look great. Medicare Part A is on track to be insolvent within a startling eight years.
Social Security is in slightly “better” shape. Predicted to run out of money in 2034, it is going to start dipping into reserves for the first time ever this year. Together, Social Security and Medicare face an $82-trillion deficit over the next 30 years that would require crippling levels of taxation or drastic cuts to benefits once crisis hits.
What’s more, as analysis from the Committee for a Responsible Federal Budget shows, the problem is only likely to get worse.
Unfortunately, the kind of tradeoffs Schultz brought up are not a concept our elected officials have traditionally understood. They increase spending on the Pentagon and reject Farm Bill reforms while, at the same time, they dismiss the deficit impacts of tax reform.
And that’s not to mention the enormous liabilities in entitlement programs, the vast majority of federal spending that rarely, if ever, gets a vote. Increasingly, even discretionary spending gets few actual votes, as more and more of it is rolled into massive omnibus packages that are brought for pass-fail votes that always pass.
Imagine for a moment if, next year, major government programs were set to go bankrupt. Millions of seniors and low-income dependents would be making desperate plans, facing a drastic reduction in income. Politicians would leap into action, and the news cycle would focus on the cliff ahead.
Unfortunately, since the cliff ahead is just a little bit farther off, politicians in both parties are willing to close their eyes and pretend just a little longer. But economics and numbers do not wait for political hopes and dreams.
This week’s reports are yet another reminder of the severity of the crisis that’s coming if politicians are not able to think long-term. For the sake of our economic future, we should demand that they are.
