by Joe Walsh
Trump is bullshitting you.
And there’s no reason he shouldn’t be able to play it straight. As the president of the United States, he has around him some folks who are pretty smart about these things. His first chairman of the Council of Economic Advisers was Kevin Hassett, who advised every Republican nominee for president dating back to George W. Bush in the year 2000 and has been an economics professor and a member of the Federal Reserve board of governors. His second, Tomas Philipson, is a world-renowned economist from the University of Chicago. His first budget director, Mick Mulvaney, who is now his chief of staff, is also no dummy. He was a strict fiscal conservative when I served with him in the House; he called the first budget President Obama proposed during his tenure in Congress “a joke,” adding “It’s hard to explain how detached from reality this is, to think that the country can spend another $1.6 trillion when it doesn’t have the means. It means either you haven’t been paying attention or you don’t care.”6 Long story short: Trump has the experts he needs to get him up to speed.
Instead, he stubbornly has the United States in reverse. Only an obstinate narcissist who thinks he knows better than anyone else could possibly misunderstand so severely how the federal budget works.
There’s more evidence than just his comment to President Moon to support criticizing Trump’s lack of knowledge. One of the more jaw-dropping ones is his belief about mandatory federal spending—most of which is often called “entitlement spending”—on Social Security and Medicare. Trump has consistently held that he could save Social Security—which faces big shortfalls in the future (more on that in a minute)—just by taking care of inefficiency and misspent money in the program. “I’m the only one who is going to save Social Security, believe me,” he said during a Republican primary debate in February 2016. The moderator pressed him: “OK. But how would you actually do that? Can I ask you? . . .”
“Because you have tremendous waste,” he said. “I’ll tell you.” . . .
“You have tremendous waste, fraud and abuse. That we’re taking care of. That we’re taking care of. It’s tremendous. We have in Social Security right now thousands and thousands of people that are over 106 years old. Now, you know they don’t exist. They don’t exist. There’s tremendous waste, fraud and abuse, and we’re going to get it. But we’re not going to hurt the people who have been paying into Social Security their whole life and then all of a sudden they’re supposed to get less. We’re bringing our jobs back. We’re going to make our economy great again.”7
To unpack this: Trump believes that removing the deceased from benefit rolls and “taking care” of other administrative errors will keep Social Security solvent in the long run—and also that the job market and economy will improve under his watch. Which, I guess, will boost payroll tax payments, which fund Social Security, to the point that the program will definitely be all set.
In what is a recurring theme for him, he’s living in an alternate universe on this one. Social Security is the single most expensive federal program by a long shot. In fiscal year 2018 (the period between October 2017 and September 2018), it accounted for $982 billion, or about a quarter of all spending. Budget experts often measure Social Security expenditures as a share of gross domestic product (GDP)—a way of seeing how government is growing relative to the economy. In FY 2018, taxpayer dollars spent on Social Security were equal to about 4.9 percent of GDP. Put a pin in those numbers for a sec.
Because the baby boomer generation is hitting retirement age in droves, the cost of the benefits the government will owe retirees is about to explode—so much so that by the year 2020 it will exceed the total money the Treasury takes in to cover it. (Most of that money is payroll tax collections.) Now, Social Security does have reserves—but the program will have to start dipping into them to account for the yearly expenses of the program. The Social Security Board of Trustees projects that those reserves will be exhausted by the year 2035.8 After that, all the tax income of the program will be enough to pay only about three-quarters of the benefits for the following half century–plus—meaning that people born around 1970 or earlier will get short shrift. In the year 2036, it will be people born around 1971. The bottom line is that people who today are under the age of fifty aren’t expected to receive even one year of the full benefits the government is obligated to provide them—unless it begins to make some legitimate changes.
Trump thinks the necessary changes are (1) getting rid of “waste, fraud, and abuse” and (2) essentially “growing” our way out of the problem—creating such a humming economy that a bajillion Americans have jobs and pay payroll taxes. This, my friends, is not a realistic way to close the gap. First, the Social Security trustees already bake into their report what they think the United States’ future employment situation will look like. They, like most reasonable people, do not expect that the United States will soon have a labor market twice its current size, able to foot the bill for Social Security with extra payroll tax receipts. It’s literally impossible. Second, remember the statistics I asked you to put a pin into a couple of paragraphs ago? In FY 2018, our GDP was about $20.5 trillion,9 and the dollar cost of Social Security equaled about 4.9 percent of that. In FY 2039, the Congressional Budget Office projects, GDP will be $45.7 trillion—and the Social Security trustees project that Social Security’s expense will equal 5.9 percent of that. In other words, over the next two decades, Social Security is projected to grow faster than our overall economy.
So you tell me: is the reason for that cost growth “waste, fraud, and abuse”? No. It’s the fact that a tidal wave of people is going to hit retirement soon! Jeez. This is not that hard.
We absolutely should root out misspending in Social Security, just as we should across the whole federal government. But to believe that doing so will magically get the government back into the black is delusional—or willfully misleading. In early 2019, The Daily Beast reported this:
Since the 2016 presidential campaign, Donald Trump’s aides and advisers have tried to convince him of the importance of tackling the national debt.
Sources close to the president say he has repeatedly shrugged it off, implying that he doesn’t have to worry about the money owed to America’s creditors—currently about $21 trillion—because he won’t be around to shoulder the blame when it becomes even more untenable.
The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the national debt in the not-too-distant future. In response, Trump noted that the data suggested the debt would reach a critical mass only after his possible second term in office.
“Yeah, but I won’t be here,” the president bluntly said, according to a source who was in the room when Trump made this comment during discussions on the debt.10
Well, well, well, what a selfless man! Clearly putting the long-term financial health of the United States is at the very center of his agenda.
There have been and will be people close to Trump who say, “Oh, no, no, he really cares, just you wait and see.” Those people can shut it and stop insulting my and everyone else’s intelligence. Trump doesn’t give one. single. shit. It’s because ignoring the United States’ looming entitlement and debt crises is best for him politically. Sure, Trump is not the first politician, including many members of Congress, to make this calculation. But it sounds as though he’s in rare company just admitting it. He is not a public fiduciary. Instead, he’s selfish. He’s a narcissist.
If we actually want to fix Social Security for people of retirement age fifteen years from now and beyond, we have to make the numbers work using math, not a magic wand. The Committee for a Responsible Federal Budget has an outstanding tool on its website that shows how much money certain reforms to the program would cost or save.11 These are some of the options for savings we have to choose from: raising the retirement age, slowing the percentage growth of benefits for everyone or those of certain ear
ners by income level, changing how the government calculates inflation, raising how much of a person’s earnings are payroll taxable, raising payroll tax rates, and means-testing benefits for high-earning seniors. You may be thinking, Man, all of those sound pretty icky. But you know what? That’s how it goes when the bills come due. For all the bitching that Republican politicians have done over the years about running the government like a business, you’d think every CEO in the private sector had spent his or her company’s money like there was no tomorrow.
But, hey—if you believe the economic advisers close to Trump, that’s exactly how he prefers to manage your tax dollars.
I don’t want to give short shrift to Medicare, because the government spends about as much on it as on our defense budget. It’s actually forecasted to be relatively more expensive than Social Security in the long run: Medicare will overtake Social Security by 2040 and be about 5 to 7 percent costlier over the subsequent fifty years, per the Social Security and Medicare trustees. The part of it that’s backed by payroll taxes, Medicare Part A—which pays for inpatient hospital services, skilled nursing facility and home health care services following hospital stays, and hospice care—will no longer have any reserves by 2029. After that, Part A will be able to cover only 77 to 89 percent of costs over the next sixty-five years. The part of it that isn’t backed by payroll taxes, Medicare Parts B and D—which help pay for physician, outpatient hospital care, home health care, and other services for individuals who have voluntarily enrolled—is funded mostly out of general tax revenue. Because of that, beneficiaries of Parts B and D don’t face the same risk of benefit cuts as a result of inadequate financing. “However,” the trustees predict, “the aging population and rising health care costs cause SMI [supplementary medical insurance] projected costs to grow steadily from 2.1 percent of GDP in 2018 to approximately 3.7 percent of GDP in 2038.”12 About three-quarters of that increase—hundreds of billions of dollars—will have to come from somewhere in the federal budget.
My questions are: From where? Do we increase taxes on individuals, corporations, certain goods and services, or some combination of those? Do we get the money from other federal programs? What happens when angry voters, powerful business interests, and the advocates of the other programs that stand to lose money to fund Medicare begin to protest and threaten lawmakers with grassroots campaigns and advertising opposing their reelection? Do the lawmakers give in and pass the buck—or the trillion of them—to the next Congress? What happens when the buck can’t be passed any longer, when Social Security and Medicare beneficiaries start seeing only part of the benefits that they paid their whole working lives to receive in full, and when the pressure that Medicare puts on other parts of the federal budget bursts?
Like hell if any of us know. But I guess the result will answer the question “What happens when you spend half a century electing cowardly leadership to handle your money?”
With every election, the urgency goes up to elect to Congress and the White House real leaders who will govern as though the United States can’t print money indefinitely. Donald Trump is so far removed from being such a person that it’s reasonable to assume he understands the nature of the danger—and willfully ignores it. As the same Daily Beast story referenced above noted, one of Trump’s campaign advisers for economic issues, Stephen Moore, told the candidate that the United States could confront the debt problem just by helping create a stronger economy: “As Moore recalled, a belief that robust economic growth would solve all problems was the way Trump—starting in 2016—justified the cost of his ambitious proposals to slash taxes, pursue big infrastructure projects, and simply avoid massive cuts to Social Security and Medicare. Since then, the president has continued to show indifference over the national debt, to the consternation of more traditionally conservative associates.”13
Well, here we are, more than three years later, and the unemployment rate has been at or below 4 percent for several months, the major stock market indices continue to be high—and the federal government is back to running about a $1 trillion budget deficit for the first time since the Obama years and the debt just continues to climb. Growing the economy—which, in turn, grows tax revenue to pay for government spending—is certainly part of the equation for improving the United States’ fiscal health. But it can help only so much, relative to what the country already owes and is about to owe to seniors. We know enough about Trump to understand that he won’t be moved to change course. “Several people close to the president, both within and outside his administration, confirmed that the national debt has never bothered him in a truly meaningful way, despite his public lip service,” the Daily Beast piece noted.14
His promises on this issue could definitely have been interpreted as mere “lip service” when he signed a two-year spending deal in February 2018 that the Tea Party would’ve revolted against—and that fiscal conservatives even then protested. The agreement blew through the spending caps previously enshrined in law, hiking federal spending by about $400 billion. The House Freedom Caucus opposed it. “We support funding our troops, but growing the size of government by 13 percent is not what the voters sent us here to do,” the group’s statement read.15 So did former senator Jeff Flake, who made his name in the House trying to block largesse. “I will not vote for it. I love bipartisanship, as you know, but the problem is the only time we discover bipartisanship is when we spend more money,” he said.16
More “lip service” hypocrisy was exposed when Trump did the same thing the following year, approving a government funding act that increased spending by about $320 billion. The Freedom Caucus said no again: “Our country is undeniably headed down a path of fiscal insolvency and rapidly approaching $23 trillion in debt. This is completely unsustainable, and we owe taxpayers and future generations better.”17 Senator Rand Paul savaged the bill: “Many of the supporters of this debt deal ran around their states for years complaining that President Obama’s spending too much and borrowing too much. And these same Republicans now, the whole disingenuous lot of them, will wiggle their way to the front of the draw, to the front of the spending trough to vote for as much or more debt than President Obama ever added.”18
You know how Trump assessed the situation? By nakedly putting political interest ahead of the good of the country. “Two year deal gets us past the Election. Go for it Republicans, there is always plenty of time to CUT!” he tweeted.19
One such time was in May 2018, when the Office of Management and Budget proposed an idea to rescind $15 billion of unused money and “budget authority”—an amount Congress had approved for spending but hadn’t actually appropriated yet—from previous years. Mulvaney, then the budget director, talked up the idea in his written notice to the president: “As demonstrated in your first two Budgets, the Administration is committed to ensuring the Federal Government spends precious taxpayer dollars in the most efficient, effective manner possible.”20 (Uh-huh. Sure.) House minority leader Kevin McCarthy called the rescission a step to “restore our fiscal footing.” But as Mulvaney himself informed Trump, the net effect of the plan would’ve been to reduce actual spending by just $3 billion, not $15 billion. In FY 2018, the federal government coughed up $4.1 trillion for its programs. Three billion is 0.07 percent of $4.1 trillion. That’s some real “fiscal footing” those guys found.
Nobody can hold Donald Trump uniquely responsible for the United States’ sorry budget situation. Its root causes are: allowing federal retirement programs to run on autopilot for decades without allowing for the changes in the country’s demographics and economy; expanding the size of government during presidential administrations and Congresses of both parties; a killer financial crisis in 2008 that stomped on tax revenues and put into perspective our fiscal freewheeling as never before; and treating the debt like an afterthought in the budget process, since red ink is rarely a threat in the here and now, voters ultimately don’t care about it that much, and, if anything, politicians face the ire of the public for
daring to cut things instead of pursuing real reform.
But you’d think that after a rebellion over economic issues in 2010, which brought the Tea Party to DC, having a Republican in the White House would have altered the government’s trajectory at least a bit. Not with Trump. Not when that man single-mindedly and stubbornly thinks about budget deficits in entirely the wrong way and when he happily uses the promise of unbroken retirement benefits to help secure the votes of people who may not be around to vote anymore by the time the debt collector comes a-calling. Just don’t ever forget this sentence the next time Trump promises not to screw over your children and your children’s children with the way he uses taxpayer money: “Yeah, but I won’t be here.” Those aren’t the words of a responsible steward but of a man who has bankrupted companies,21 is intellectually bankrupt himself, and is nothing more than a self-obsessed charlatan trading the country’s future health for his current power. In that respect, Trump referring to himself as “the king of debt” rings true.
Chapter 10
Fixing Trade
International trade is arguably Donald Trump’s pet issue. It’s been his fixation for years. “You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners,” he wrote in his campaign book The America We Deserve, published in the year 2000. It was in that election cycle that he contemplated a run for president on the Reform Party ticket. He had the same hubris about the subject then that he does now: “What I would do if elected president would be to appoint myself U.S. trade representative; my lawyers have checked and the president has this authority.”* He had the same misunderstanding about trade’s mutual benefits: “It’s become a cliché to say that business, especially trade, is like war. . . . But cliché or not, it’s true.” He had the same adversarial tone toward allies: “Germany and Japan were our enemies in World War II, and for decades afterward each was a powerful competitor in trade—tough in peacetime as each had been in war.”1 If you’re wondering Did he really liken fighting Nazis to competing with Germany in the global trade market? Yes, he really did liken fighting Nazis to competing with Germany in the global trade market.