John Hood: Carolina Lawmakers Split on Debt Deal
RALEIGH — North Carolina’s own Patrick McHenry, who represents our 10th District in the U.S. House of Representatives, helped negotiate the debt-ceiling compromise that President Joe Biden signed on June 3. Not surprisingly, McHenry described it as a major accomplishment. “Huge relief to actually see a bipartisan bill make its way through the House and Senate and get a presidential signature,” said McHenry, a key ally of House Speaker Kevin McCarthy, “and honored to be a part, even a small part of this big undertaking in divided government.”
North Carolina’s own Dan Bishop, who represents the neighboring 8th District, is a frequent critic of the speaker and voted against the deal. Not surprisingly, Bishop described it as a “disaster” and a “huge” loss for the American people. “McCarthy got rolled,” he tweeted.
As for the rest of the state’s congressional delegation, all the other House members voted in favor of the deal except 2nd District Democrat Deborah Ross, who was absent. Sen. Thom Tillis also said yes. Sen. Ted Budd said no.
I’m not going to argue that the debt-ceiling bill was unimportant. And if I’d been in Congress, I’d have voted for it, given that it will save taxpayers a bit of money and somewhat strengthen work requirements for public assistance. But I can also understand the unenthusiastic response of fiscal conservatives, both inside and outside government. Our federal budget is massively out of balance. Bringing it into balance at some point in the not-too-distant future — which I view as both an economic necessity and a moral imperative — will not happen through such low-stakes negotiations.
Of the $6.3 trillion the federal government is spending this year, current revenue will fund only $4.9 trillion. Washington is borrowing the remainder, $1.4 trillion. What would be necessary to close such a deficit? Well, Congress and the administration could attempt to close the gap with more revenue. But if you think a 29% increase in the federal tax burden wouldn’t jolt our economy into a deep recession — and motivate well-lawyered individuals and companies to game the system — you live in fantasyland.
On the other side of the ledger, that $6.3 trillion in expenditures consist of $4.6 trillion for “mandatory” items (debt service plus Social Security, Medicare, Medicaid, and other welfare programs) and $1.7 trillion in “discretionary” spending. In theory, we could balance the budget by whacking the latter category by 82%. Keep in mind, though, that this category includes national defense, education, energy, transportation, and a host of other popular — and in some cases essential — programs.
Cutting discretionary spending will be necessary, yes. Heck, I’m conservative as they come, but I think additional revenue will be necessary, too, as part of a lasting and politically salable solution (though I’d opt for selling federal assets and closing loopholes over raising tax rates).
The inescapable math of the problem, however, is that unless our elected officials are willing to reform the entitlements that comprise most of the federal budget, their claim to care about federal debt shouldn’t be taken seriously. Indeed, the math gets even more inescapable when you consider the fact that entitlements will make up a larger share of federal spending in the future than they do today. America’s population is aging. The ratio of retirees to workers is growing.
We need to reduce Social Security benefits for retirees with above-average incomes. We need to do the same for Medicare coverage, while also reforming the way both Medicare and Medicaid compensate providers for medical services. We need to encourage Americans to save more for their own post-retirement needs, including their long-term care, and to rely more on their own children and grandchildren rather than expecting other people’s children and grandchildren to close the gap.
We should have initiated such entitlement reforms decades ago. That would have made them easier to adjust to. Every year we delay the inevitable, the transition gets harder. It’s time for those in positions of leadership to earn that label.
John Hood is a John Locke Foundation board member. His latest books, Mountain Folk and Forest Folk, combine epic fantasy with early American history (FolkloreCycle.com).
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