Trump and the debt

Cecil Whig - - FRONT PAGE - Jay Am­brose

— Here is an is­sue where Don­ald Trump could fail as pres­i­dent and the coun­try would pay might­ily: the fed­eral debt.

He did re­fer to it dur­ing the cam­paign, say­ing his growth plans could whip the prob­lem, but some of his an­nounced poli­cies could ac­tu­ally ex­ac­er­bate the threat. They in­clude leav­ing So­cial Se­cu­rity un­touched, re­duc­ing taxes too much and bar­rel­ing ahead with spend­ing plans.

Repub­li­cans will cower and Democrats will try to de­stroy him if he moves in some right di­rec­tions, but none of this di­min­ishes what has been said by a host of bi­par­ti­san sources. Right now, the debt is at $20 tril­lion, equiv­a­lent to $158,604 per house­hold and 75 per­cent of gross do­mes­tic prod­uct. It’s ex­pected to go up to 84 per­cent of GDP by 2025 if So­cial Se­cu­rity and Medi­care are not ad­justed. Here are some of the pos­si­ble con­se­quences as in­creases hap­pen.

Stalled eco­nomic growth and likely the re­verse. Much higher taxes. Wages hur­dling down. In­vest­ment crashes. Liv­ing stan­dards flat on their back. Lit­tle money in the bud­get for any­thing but en­ti­tle­ments. And fi­nally, a fis­cal cri­sis sham­ing past ones as noth­ing much.

A ma­jor is­sue is So­cial Se­cu­rity, ready to zoom to mad­ness as baby boomers start re­tir­ing en masse even as Hil­lary Clin­ton, to men­tion a re­cent pres­i­den­tial nom­i­nee, wanted to in­crease its ben­e­fits. She said she would pay for them — not the other in­creased costs — through rais­ing caps on the rich. Of course, if you stuck to the So­cial Se­cu­rity for­mula that says the more you pay, the more you get, that would not do a lot of good. Trump said he would not touch So­cial Se­cu­rity, but it is al­ready eat­ing us up de­spite what many say.

They ar­gue that So­cial Se­cu­rity is not now adding to the debt. Tech­ni­cally, that is true. When So­cial Se­cu­rity rev­enues aren’t spent im­me­di­ately, they be­come a sur­plus, mean­ing es­sen­tially that no­ta­tions are made. When the money the money is needed and spent, the no­ta­tions are re­duced. All is thereby OK? Not in the real world. The sur-


plus is not cash is sit­ting around some place or money be­ing in­vested. In­stead, the govern­ment spends like crazy on all kinds of pro­grams, far out­reach­ing any avail­able rev­enues and caus­ing the debt to go up enor­mously. When it comes time to take from the So­cial Se­cu­rity “sur­plus,” the debt is in­creased still more. In 2014, $74 bil­lion was added to the over­bur­dened debt to pay off So­cial Se­cu­rity ben­e­fi­cia­ries, and here are my ques­tions to naysay­ers.

If that money was not spent on So­cial Se­cu­rity, what was it spent on, and doesn’t this con­trib­ute to fis­cal woes that could some­day leave this na­tion flat­tened?

What Trump should con­sider is mea­sures that won’t af­fect any­one less than the well-off any­time soon. He could raise the cap but also redo the for­mula so the rich won’t get more ben­e­fits. He could curb growth by less­en­ing the ini­tial amount given; right now, it in­creases so that some­one this year who earned $50,000 will usu­ally get fewer ben­e­fits than some­one next year earn­ing the same. He could raise the re­tire­ment age ex­cept for peo­ple in tough­la­bor jobs.

His re­peal-re­place­ment over­haul of Oba­macare must re­duce its costs sig­nif­i­cantly, some­thing that won’t hap­pen if he does noth­ing new about pa­tients with pre-ex­ist­ing con­di­tions.

Those trea­sonous to the na­tional wel­fare on be­half of their own po­lit­i­cal in­ter­ests will then try to pre­vent change as they have so dis­as­trously be­fore. But the na­tional good should come first.

On his ex­pen­di­tures, such as re­do­ing our in­fra­struc­ture, he should seek out cuts else­where to pay for them. Low­er­ing cor­po­rate tax rates would be great, but not low­er­ing all the other taxes he has in mind. His repa­tri­a­tion of cor­po­rate prof­its over­seas would be a boon. He needs to re­strict his trade pro­tec­tion­ism to cau­tiously re­vised de­tails. He could maybe then get the econ­omy up to 3 per­cent growth, but that alone will not erase the debt prob­lem.

Jay Am­brose is an colum­nist for Tri­bune News Ser­vice. Read­ers may email him at speak­to­

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