In my column today appearing at The Week, I look at the prospects of serious budget cuts without taking on entitlement spending — and come away more convinced than ever that entitlement reform has to be addressed now, regardless of whether Democrats choose to engage or not. With a stunning national consensus that taxes and the debt ceiling should not be raised to address the budget deficit, the math dictates that entitlements have to get addressed immediately:
Entitlement reform has to be part of any serious reform, especially if conservatives want to avoid deep cuts in defense spending. Mandatory spending combined with debt payments already comprise 63 percent of the proposed 2011 budget. Discretionary spending, which includes defense and Homeland Security, amounts to just over $1.4 trillion, with the rest going to debt service ($251 billion). The projected deficit comes to $1.267 trillion, which exceeds security outlays by almost 30 percent ($895 billion), and is more than twice the non-security discretionary budget ($520 billion).
Clearly we can’t get to fiscal equilibrium by focusing on non-security discretionary spending. Even cutting the security budget in half and wiping out all other discretionary spending entirely only reduces the budget by $968 billion, which leaves a need to borrow another $300 billion for this budget year. The only way to get to a balanced budget in the short term is to seriously reduce mandatory spending. And that means Social Security ($730 billion), Medicare ($491 billion), and Medicaid ($297 billion).
Even apart from the budget crisis at hand now, any serious budgetary reform for the long term has to include restructuring entitlement programs. In six years, the White House projection for Social Security in 2011 shows outlays will increase 37 percent to just over a trillion dollars in 2017. Medicare outlays — assuming ObamaCare, mind you — will increase 64.8 percent in the same period, according to the same White House projections. Without serious structural changes in entitlement programs, mandatory spending combined with interest payments will comprise 72 percent of the 2017 budget, which increases from $3.834 trillion to $4.872 trillion. Waiting only makes the reforms more difficult and puts us deeper into the hole from which we must climb.
Earlier today, Tim Pawlenty discussed this very problem with me in our live show from his book signing. He offered a solution to the debt ceiling issue by advising Republicans to pass a sequencing law that requires the US to meet obligations to debtholders first before any other funding gets spent, which would allow us to avoid default for a short period while we look at ways to reduce the budget. However, Pawlenty agrees that we cannot get the budget reduced enough without entitlement reform, and strongly urged the Republicans in Congress to start that process immediately:
As Pawlenty says, it’s eighth-grade math. The budget isn’t so mystifying as to hide the fact that we cannot correct a $1.27 trillion deficit by attacking only $450 billion in spending. Either we get serious about budget reform and lead, or toss out the national consensus that has provided this rare opportunity to get it right.