The surging share of federal spending consumed by interest on the national debt poses an obvious dilemma: All else equal, without a tax increase or a fiscal windfall, every federal dollar spent on debt service is a dollar less for other priorities.
Since tax increases are heresy, anyone serious about deficit reduction must have spending cuts in mind. Congressional Republicans are in fact proposing $4.7 trillion in cuts over the next 10 years just to balance the annual budget – not eliminate or even reduce the total federal debt, mind you. They didn’t help their cause by approving tax cuts last year that the Congressional Budget Office projects will add $1.9 trillion to deficits over the same period.
Congressional “deficit hawks” generally abandon their budget-cutting principles when they become inconvenient, but what would happen if they followed through? A recent “illustrative scenario” produced by House Democrats suggests the severity of cuts that would be needed to eliminate $4.7 trillion in mandatory spending (which accounts for 69 percent of the budget today, including interest) over 10 years. The takeaway: It won’t be pleasant.
“Achieving budgetary savings of this magnitude will require unprecedented cuts in benefits and programs that played a major role in creating and sustaining a broad-based American middle class,” the study concludes, “as well as programs that protect millions of economically struggling American families and children from falling into utter destitution.”
Political parties of any stripe tend to overstate their cases, but if the Republicans achieve even half the austerity suggested here, middle-class and low-income folks will have paid dearly for tax cuts that primarily benefit the well-off.
Some of the items in the report are actual GOP policy, not just notional assumptions made for the sake of the exercise. The worst would convert Medicare from a “defined benefit” to a “defined contribution” program, replacing guaranteed payments with vouchers that the elderly would use to buy their own coverage out there in the private insurance market. Of course: What 80-year-old isn’t competent to make her own coverage decisions?
Among other measures needed to get to $4.7 trillion, says the study: cutting health benefits for military retirees (up to $135 billion), dismantling Obamacare protections like premium subsidies ($1.3 trillion), and ending wildlife conservation programs ($31 billion), effectively “dismantling the federal government’s role as protector of our natural resources.”
These figures don’t reflect what Republicans might actually propose, but cuts not made in one program would presumably have to be made elsewhere if they’re going to reach the goal. Meanwhile, the crowding out of federal programs by debt service is likely only to worsen in the era of rising interest rates that has already started.
Republicans are tribally hostile to deficit spending. Luckily for everyone else, they’re only half serious maybe half of the time. As ThinkProgress recently noted, Illinois Republican Rodney Davis, sponsor of a House bill passed last month that would prevent the Trump tax cuts from expiring in 2025 and produce a projected $545 billion in deficits over the coming decade, is the same Rodney Davis whose campaign website calls the rising national debt “wrong and immoral” (is there a difference?) and says it creates “economic uncertainty that the nation cannot afford.”
Needless to say, he voted for the bill.
Chris Gay is a veteran of financial journalism who writes from New York City. Follow him @cgayNYC.