Social Security and Medicare are on the path to insolvency sooner than previously thought, and Rep. Dave Brat, R-Va., is frustrated that Congress won’t act to stave off fiscal disaster when the solution seems obvious to him.
On Tuesday, the government announced that on their present courses, Medicare will become insolvent in 2026 and Social Security faces the same fate in 2034. The Medicare projection moves the insolvency date three year’s closer than the government estimated just last year.
And it’s not just the warnings of impending fiscal chaos. Brat says mandatory entitlement spending once consumed 25 percent of the budget and 75 percent was spent on defense and other domestic spending. Now, he says entitlements gobble up 75 percent of the budget and it already has some people feeling the pain, since far less money is available for other priorities.
“People are starting to feel that and states are starting to feel that and localities, because the same money is not getting down to them,” said Brat, always ready with an example of the red ink engulfing the U.S. to the tune of $21 trillion and another $100 trillion in unfunded liabilities.
“In ten years or so, they’re saying the interest payment alone on the debt will be bigger than the defense budget,” said Brat.
He’s also keeping a close eye on Wall Street.
“The bond market is the ultimate arbiter here. They will send the signal on what is too much debt. The unfunded liabilities fit into that indirectly. They put (on) pressure. You’re getting a lot of new concerns from the market itself.
“That is unfortunately what it will take. As soon as the bond market has a hiccup, then everyone’s going to get way more responsive,” said Brat.
The trillions of dollars in debt the nation faces is hard for anyone to fully comprehend, but Brat says there is a simple approach to restoring solid footing to Medicare and Social Security.
He says those programs began when the life expectancy in the U.S. was 65, so the government made money on the people who aid into the system but didn’t reach retirement age and had enough resources to provide assistance for those that lived longer.
That has changed.
“The programs still kick in at 65 but the average death age is now 83. So you don’t have to be a rocket scientist to figure out what the answer is. But that’s politically explosive to rearrange these programs and reform them so that has to be bipartisan and it has to be done within an election cycle,” said Brat.
Brat suspects the Democrats will continue to argue that tax hikes on “the rich” will shore up the systems for the long haul. Brat says that would barely make a dent.
“If I told you how much you would have to raise taxes to make these programs solvent, you wouldn’t believe it. It’s through the roof. Those aren’t politically palatable and if you put those tax increases in, you’d bring the economy to a halt. You’d have zero growth or recession immediately,” said Brat.
“The Democrats don’t like spinach. They’re more on the spending side. They’re not trying to trim and save money over the long run. They want to expand all of government,” said Brat.
Democrats strongly dispute the diagnosis for the encroaching insolvency. Many politicians on the left and some policy experts contend the $1.5 trillion Republican tax cuts are the driving force behind the revised estimates on Medicare.
Brat pushes back strongly against that analysis.
“That’s just pure politics. The tax cuts are $150 billion a year (over ten years) and if you grow at three percent they’re paid for. The left said you’ll never get three percent and we’re at three percent,” said Brat.
He says reckless spending like the Democrats forced into the recent omnibus that also boosted military spending is how we got to this point.
“What they won’t tell you is that to get nine Democrat Senate votes at the end of the budget debate, we had to plus up the budget $400 billion – the tax cuts were $150 billion – to go sign a budget,” said Brat.
Brat says Congress must get it’s act together but shows no interest in doing so.
“No. Nothing. No response. That’s what’s stunning. People have internalized the politics and realized what it would take to achieve that change,” said Brat. “We should be dealing with it right now if we’re rational and foresighted.”
He says the inaction leaves an unfair burden on upcoming generations.
“The only substantial power group that doesn’t have a lobbyist up here is the kids, and if you’re not represented, you don’t get attention,” said Brat