Who’s most to blame for the coming fiscal collapse of America?
posted at 6:01 pm on July 13, 2012 by Dustin Siggins
Note: This op-ed was done in tandem with David Weinberger, who previously worked in communications at The Heritage Foundation and currently blogs near the Twin Cities in Minnesota. All data for the calculations cited below were based off of OMB and CBO public data gathered by the Center for Budget & Policy Priorities (CBPP) and can be seen at a spreadsheet here. Special thanks go to Patrick Tyrrell and William Beach of Heritage and Richard Kogen and Kathy Ruffing of CBPP for assistance with inflation adjustments and other critical components of the calculations.
With Senate Majority Leader Reid’s (D-NV) decision on Tuesday to not pass a budget for the third straight fiscal year, the Washington game of fiscal chicken–this time over $19 billion–is in full swing once again. To provide perspective, this is less than one-half of one-percent of the 2012 budget and less than 1.5% of this year’s expected deficit. It’s also about one-eighth of one percent of our national debt.
While politicians bicker, Rome burns and the budget grows. While some pundits blame Obama, and others blame Bush, and still others blame everyone in the Beltway, the fact is neither president or party has instituted the wisest fiscal policy. Still, the increase in spending under both has not been driven principally by new spending initiatives. It has instead been driven by the increasing number of retirees and resulting growth of social spending and especially Social Security and Medicare.
Using publicly available data, we found figures on federal spending from 2000 through 2013 (2012 and 2013 spending is estimated, of course). Our inflation-adjusted calculations — using constant 2010 dollars — related to the growth of Social Security and Medicare, based upon that data, can be seen in this chart:
Here are some highlights:
In 2001, the first year of the Bush presidency, Social Security spending amounted to $528 billion. By his final year in office, it had risen to an amazing $692 billion. The increase with Medicare was even more dramatic — from $263 billion to $434 billion during that same period. While most of this was automatic growth from programs created and modified decades earlier, the president does deserve responsibility for passage of Medicare Part D in 2003, which fattened the program and is expected to have added approximately $375 billion to the national debt by 2013.
Under President Obama, the unrestrained automatic spending binge has only continued. While conservatives rightly believe that the Patient Protection and Affordable Care Act (PPACA) will make health care costs worse, the vast majority of the programs, costs, tax increases and other aspects of the law haven’t yet been implemented. We have therefore not included this in our calculations. However, even ignoring the PPACA, costs of the retirement programs have continued to skyrocket.
Social Security spending leaped from $692 billion when Obama took office to a projected $770 billion by 2013. A mere thirteen billion of this increase came from costs attributed to changes in the 2009 stimulus. Meanwhile Medicare spending will have gone up from a ripe $434 billion to an estimated $491 billion during that same time. And this is excluding Medicaid, which has also grown on automatic pilot, on track itself to consume $283 billion of the federal budget by 2013.
All told, Social Security and Medicare have gone from swallowing $791 billion in 2001 to — along with Medicaid — seizing a projected $1.559 trillion by 2013. With Obamacare on top of that, and total federal spending having more than doubled since 2001, we’re looking at a very grave situation. Strong economic growth could perhaps offset the gravity of these costs in the short term, but the bottom line is that structural reform of entitlement programs is paramount to any real fiscal fix.
This makes for a disastrous structural budgetary situation. Yet, to repeat, most of the blame for this growth does not lie with President Obama or President Bush. It in fact belongs to those who created and changed the programs years and decades before either of them took office. President Obama, for example, could have a balanced budget this year – or very close to it – if it wasn’t for the burden of Social Security and Medicare.
Of course, this does not excuse these presidents and their respective Congresses from their responsibilities to make changes to the programs that make them affordable and/or return aspects of them to the states, where they belong. To his credit, President Bush did attempt to do this to Social Security in 2005, and while we believe the PPACA will worsen America’s health care costs, President Obama took on Medicare in 2009 and 2010.
But when it comes to blaming presidents for spending, pundits and politicians alike should be intellectually honest and remember it was Presidents Franklin Delano Roosevelt and Lyndon B. Johnson who put the federal budget on the path to fiscal unsustainability. Most presidents and Congresses since have merely failed to correct this, and this failure is why the Social Security trust fund is expected to start going bankrupt in 2013.
As most Americans know, we don’t have much time before a fiscal collapse hits the country, nailing the Debt-Paying Generation hardest of all. Yet Reid and many Republicans would rather argue over a rounding error than the 33% of the budget (and growing) taken up by Social Security and Medicare.