By Paul Krugman
Opinion Columnist
A few days ago, the Biden administration released its budget proposal for the 2025 fiscal year (which begins in October). Given that Republicans control the House, this budget isn’t going to happen, so it serves mainly as a statement of principles and intent.
But that doesn’t make the budget irrelevant. It clearly signaled Democrats’ vision for the future — in particular, their belief that we can preserve the solvency of Social Security and Medicare by raising taxes on high incomes rather than by cutting benefits. And it draws a stark contrast with the vision of Donald Trump, who appeared to say during an interview with CNBC that he would seek to cut those programs.
I’ll come back to the question of what Trump meant by his remarks and, more important, what he might actually do if he returns to power. First, however, let’s talk about President Biden’s position.
You might be tempted to dismiss Biden’s assurances on safety net programs as boilerplate — don’t Democrats always promise to protect Social Security and Medicare?
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But Biden has staked out a significantly stronger position than that of Barack Obama, who, as president, all too often seemed to be in the intellectual thrall of those I used to call the Very Serious People, opinion leaders who a decade ago dominated inside-the-Beltway discourse and were obsessed with the need for entitlement reform — which effectively meant cuts to Social Security and Medicare. Obama’s 2014 fiscal year budget teased entitlement reform to the point that even John Boehner, then the Republican House speaker, was prompted to say Obama “does deserve some credit for some incremental entitlement reforms that he has outlined in his budget.”
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Biden is saying that none of this is necessary. This is a significant move to the left — although it’s also a move to the center, in the sense that voters never agreed with the elite conventional wisdom that benefits must be cut and a majority consistently say the rich don’t pay enough in taxes.
What explains this toughening up of the Democratic position? For one thing, entitlement programs look a lot more fiscally sustainable than they used to.
A decade ago, projections of spending generally assumed that health care costs would continue their historical pattern of rising much faster than G.D.P., making Medicare and other health programs increasingly unaffordable. In fact, however, Medicare costs, in particular, have been rising much less than expected. We don’t know exactly why, although cost reduction efforts in the Affordable Care Act probably played a role.
We still have an aging population, which means a rising ratio of retirees receiving benefits to workers paying taxes; the Congressional Budget Office expects combined spending on Social Security and Medicare to rise by about three percentage points of G.D.P. over the next 20 years. But this cost rise, while not small, is moderate enough that it could be offset with higher revenues.
At the same time, the Very Serious People have lost much of their influence. Their repeated predictions of fiscal crisis kept not coming true. The inflation surge of 2021-22 temporarily boosted the credibility of critics of government spending, but this credibility evaporated when dire warnings about persistent stagflation proved utterly wrong.
All of this has, I believe, encouraged Biden and his officials to stake out a firm position opposing cuts to America’s social safety net — indeed, calling for increased benefits, to be paid for with increased taxes on corporations and high-income individuals.
What about Trump? Here’s what he said: “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.” If you have trouble parsing that, it’s not you; it’s him. Trump sounded to me like a student who didn’t do the reading, trying to bluff his way through an essay question. If pressed about what “bad management” he was talking about, which theft he had in mind, he’d probably just respond with more word salad.
And desperate follow-up attempts by the Trump campaign to insist that “cutting” didn’t actually mean, well, “cutting” weren’t convincing.
Incidentally, Social Security sees very little fraud, and if Medicare is very badly managed, how has it become so effective at cost control?
Trump gives no indication here that he really knows what he’s talking about. What that could mean in practice, however, is that if he gets back to the White House, he’ll do for Social Security and Medicare what he did in his almost successful attempt to replace Obamacare: leave the drafting of legislation to right-wing ideologues who do understand how the programs work — and who want to gut them.
One final point: Trump’s plan for a draconian crackdown on immigration would be a disaster on many fronts, but one important consideration is that it would have a catastrophic impact on the future finances of Social Security and Medicare. Why? Because at this point, immigration is crucial for growth in the working-age population, whose taxes support retirees.
So will Social Security and Medicare be on the ballot this November? Definitely. Biden has a clear plan to preserve these programs; Trump, wittingly or unwittingly, would probably help wreck them.
Opinion Columnist
A few days ago, the Biden administration released its budget proposal for the 2025 fiscal year (which begins in October). Given that Republicans control the House, this budget isn’t going to happen, so it serves mainly as a statement of principles and intent.
But that doesn’t make the budget irrelevant. It clearly signaled Democrats’ vision for the future — in particular, their belief that we can preserve the solvency of Social Security and Medicare by raising taxes on high incomes rather than by cutting benefits. And it draws a stark contrast with the vision of Donald Trump, who appeared to say during an interview with CNBC that he would seek to cut those programs.
I’ll come back to the question of what Trump meant by his remarks and, more important, what he might actually do if he returns to power. First, however, let’s talk about President Biden’s position.
You might be tempted to dismiss Biden’s assurances on safety net programs as boilerplate — don’t Democrats always promise to protect Social Security and Medicare?
Advertisement
SKIP ADVERTISEMENT
But Biden has staked out a significantly stronger position than that of Barack Obama, who, as president, all too often seemed to be in the intellectual thrall of those I used to call the Very Serious People, opinion leaders who a decade ago dominated inside-the-Beltway discourse and were obsessed with the need for entitlement reform — which effectively meant cuts to Social Security and Medicare. Obama’s 2014 fiscal year budget teased entitlement reform to the point that even John Boehner, then the Republican House speaker, was prompted to say Obama “does deserve some credit for some incremental entitlement reforms that he has outlined in his budget.”
Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.
Biden is saying that none of this is necessary. This is a significant move to the left — although it’s also a move to the center, in the sense that voters never agreed with the elite conventional wisdom that benefits must be cut and a majority consistently say the rich don’t pay enough in taxes.
What explains this toughening up of the Democratic position? For one thing, entitlement programs look a lot more fiscally sustainable than they used to.
A decade ago, projections of spending generally assumed that health care costs would continue their historical pattern of rising much faster than G.D.P., making Medicare and other health programs increasingly unaffordable. In fact, however, Medicare costs, in particular, have been rising much less than expected. We don’t know exactly why, although cost reduction efforts in the Affordable Care Act probably played a role.
We still have an aging population, which means a rising ratio of retirees receiving benefits to workers paying taxes; the Congressional Budget Office expects combined spending on Social Security and Medicare to rise by about three percentage points of G.D.P. over the next 20 years. But this cost rise, while not small, is moderate enough that it could be offset with higher revenues.
At the same time, the Very Serious People have lost much of their influence. Their repeated predictions of fiscal crisis kept not coming true. The inflation surge of 2021-22 temporarily boosted the credibility of critics of government spending, but this credibility evaporated when dire warnings about persistent stagflation proved utterly wrong.
All of this has, I believe, encouraged Biden and his officials to stake out a firm position opposing cuts to America’s social safety net — indeed, calling for increased benefits, to be paid for with increased taxes on corporations and high-income individuals.
What about Trump? Here’s what he said: “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.” If you have trouble parsing that, it’s not you; it’s him. Trump sounded to me like a student who didn’t do the reading, trying to bluff his way through an essay question. If pressed about what “bad management” he was talking about, which theft he had in mind, he’d probably just respond with more word salad.
And desperate follow-up attempts by the Trump campaign to insist that “cutting” didn’t actually mean, well, “cutting” weren’t convincing.
Incidentally, Social Security sees very little fraud, and if Medicare is very badly managed, how has it become so effective at cost control?
Trump gives no indication here that he really knows what he’s talking about. What that could mean in practice, however, is that if he gets back to the White House, he’ll do for Social Security and Medicare what he did in his almost successful attempt to replace Obamacare: leave the drafting of legislation to right-wing ideologues who do understand how the programs work — and who want to gut them.
One final point: Trump’s plan for a draconian crackdown on immigration would be a disaster on many fronts, but one important consideration is that it would have a catastrophic impact on the future finances of Social Security and Medicare. Why? Because at this point, immigration is crucial for growth in the working-age population, whose taxes support retirees.
So will Social Security and Medicare be on the ballot this November? Definitely. Biden has a clear plan to preserve these programs; Trump, wittingly or unwittingly, would probably help wreck them.
