Not Even Nuking Social Security Would Be Enough To Fix Deficit

In February, the Congressional Budget Office (CBO) released its annual projections of the budget and economic outlook for the coming decade. As usual, the projections look bleak — a deficit of nearly $2 trillion ($1.853 trillion, to be precise) this fiscal year, and over $23 trillion in cumulative deficits over the coming decade, which would place our federal debt well into record territory when measured as a share of the economy.

But many people’s eyes tend to glaze over when talking about debt numbers in the trillions or even as a share of the economy. Thankfully, however, the CBO analysis provides enough data points to allow for a useful, albeit hypothetical, experiment about what it would take to balance the federal budget.

A ‘Three-Bucket’ Thought Experiment

Think of the federal government as falling into three distinct buckets:

Discretionary Spending ($1.88 trillion this fiscal year): This category contains most things we typically consider when we think about “the federal government.” It includes most funding for our military — an important funding priority given rising global threats, irrespective of one’s position on the current conflict with Iran — and border security. It also includes funding for things like education, transportation and interstate highways, the federal prison system, national parks, the National Institutes of Health, and much else. Put another way, the discretionary budget includes all the programs that shut down last October because congressional Democrats refused to pass an appropriations measure funding them.

Major Health Care Programs ($1.908 trillion this fiscal year): This category includes not just Medicare but Medicaid, Obamacare Exchange subsidies, and the Children’s Health Insurance Program.

Social Security ($1.666 trillion this fiscal year): This category will grow rapidly over the coming decade, due in large part to the continued retirement of the baby boom generation.

The buckets above exclude a few other programs, such as aid to veterans, student loans, welfare, food stamps, and farm bill aid. They also exclude interest costs, one of the fastest-growing portions of the federal budget, scheduled to exceed $1 trillion this year.

Balancing the Budget

Crude as these three buckets are, they show the magnitude of the debt and deficit problem we face because balancing the federal budget this year would effectively require eliminating one of the three buckets.

If we eliminated all funding for the military, along with all other discretionary spending — what most people consider “the federal government” — we would have a small surplus of about $27 billion this fiscal year.

If we repealed not just Obamacare but Medicaid — both Obamacare’s expansion to able-bodied adults and the portion that covers pregnant women and individuals with disabilities — Medicare, and the Children’s Health Insurance Program, we would run a small surplus of $55 billion.

If we repealed Social Security, both benefits for individuals with disabilities and the old age/retirement program, we would still run a budget deficit of $187 billion this fiscal year.

To state the obvious, Congress would never seriously consider, let alone pass, any of these three options. But individually and collectively, they illustrate the extent of the debt problems we face, not to mention the difficult choices needed to get those problems under control.

Need for Action

In case the thought experiment above didn’t bring the point home, solving our budget crunch will likely result in sacrifice and economic pain. But Congress choosing to avoid short-term political pain by postponing difficult decisions will only make the pain worse over the long term.

Last year, net interest costs exceeded the entire discretionary defense budget. This year, those costs will top $1 trillion and are set to double to $2 trillion annually by 2035. The more we keep putting on the national credit card, the bigger the bill we will face in the future.

Therein lies the problem: Today’s politicians are literally mortgaging away our children’s financial futures so they can try to win another election. The CBO report makes clear the stakes. The only question is whether we as citizens have the courage and political will to demand action — and can do so before Congress spends us fully into fiscal oblivion.