In his inaugural address in January, President Donald Trump promised “the forgotten men and women of our country will be forgotten no longer . . . the time for empty talk is over, now arrives the hour of action.”
Unless the president changes his tune on federal entitlement reform, those forgotten men and women will be hit with massive tax hikes, enacted to pay off sky-high government deficits.
At first, Trump supported bringing relief to those “forgotten men” with spending cuts in 2013, when he told former Fox News host Greta Van Susteren, “If you’re going to balance budgets, you’re going to be doing a lot more cutting, and there’s no question about it.”
Trump would add later during the interview, “Well, eventually, you’re going to have a big, fat explosion and it’s all going to come to an end.”
But in a 2015 interview with The Daily Signal, a blog published by The Heritage Foundation, Trump promised to fight against entitlement reform, telling Christian Broadcasting Network writer David Brody, “I’m not going to cut Social Security like every other Republican, and I’m not going to cut Medicare or Medicaid. Every other Republican is going to cut, and even if they wouldn’t, they don’t know what to do, because they don’t know where the money is. I do.”
Trump’s anti-reform platform is still in place today. While appearing on broadcast-television news show Face The Nation in January 2017, White House Chief of Staff Reince Preibus confirmed Trump’s anti-reform stance: “I don’t think President-elect Trump wants to meddle with Medicare or Social Security. He made a promise in the campaign that that was something that he didn’t want to do.”
Keeping campaign promises is important, but so is ensuring the fiscal stability of the nation. According to the Congressional Budget Office (CBO), in 2026, the federal deficit—the difference between government spending and revenue from taxpayers—will be about $23 trillion, or about $66,224 per man, woman, and child.
According to CBO, federal entitlement spending—such as Social Security, Medicare, and Medicaid—will likely consume 45 cents out of every dollar spent by the government by 2027.
Should current trends continue, available assets for Social Security and other entitlement programs will be depleted by 2034, the logical result of government entitlement programs running deficits without addressing the core problem. This problem has already started to occur. In 2015, lawmakers removed money from one bucket in Social Security, the Old Age Survivors Insurance fund, to fill up an unexpectedly empty bucket, the Disability Insurance trust fund.
Government projections suggest Medicare will be the next entitlement program to be hit suddenly with mathematics. It’s now expected Medicare’s Hospital Insurance fund will be underwater in 2028—two years earlier than previously projected.
That’s the bad news. The good news is there’s a solution to the problem.
In January, Peter Ferrara and Lewis Uhler published one solution for slaying the Social Security monstrosity: Individuals should be allowed to create personal accounts for their own investment and benefit.
Rather than throwing tax money collected from business owners and workers down the drain, personal, private retirement savings accounts would help make America an economic titan again, Ferrara and Uhler write.
“All those trillions of dollars going into personal accounts over the years would add to the nation’s savings and investment, which is the foundation for creating new jobs and financing rising wages. Millions of new jobs would be created, adding to labor demand to drive up wages, financing the capital equipment that increases productivity, and thus generating additional funds to pay the increased wages matching the rising productivity.”
Lawmakers and Trump know what they need to do. By giving people power over their own futures and putting them in charge of saving for their retirements—instead of expecting the government to do it for them—Trump can carry out his long-running promise to enact policies that will benefit everyday Americans.
If Trump and lawmakers choose to ignore this rapidly approaching problem, Trump’s 2013 prediction of “a big, fat explosion” will become a reality.
[Originally Published at Townhall]
Jesse Hathaway is a policy advisor for budget and tax issues at The Heartland Institute.
