Joe Bast | August 8, 2022
The nation’s $30 trillion government debt is “the elephant in the room [that] isn’t going away,” writes Jeffrey H. Anderson, a Claremont Ph.D. who I recall fondly as the author of “The Masking of America,” an article in Claremont Review of Books in Summer 2021 that thoroughly debunked mask mandates and warned of their negative socioeconomic consequences. He has a much longer history of writing on national tax and budget matters. His article in the Spring 2022 issue is titled “In the Red: Our Guidepath to Insolvency.”
Anderson documents the nation’s skyrocketing national debt using many illuminating comparisons, such as “we added as much debt held by the public in 2020 alone as we did from the end of World War II to the end of 2008, and we racked up more debt in the 12 months of 2020 than we did during the four years of the Second World War. That’s after adjusting for inflation.”
Anderson traces the cause of the debt explosion to the New Deal, and in particular to Medicare and Medicaid. He writes: “The first year that Medicare spending visibly hit the books was 1967. From that point through 2020, Medicare and Medicaid cost a combined $17.8 trillion, while our combined federal deficits over the same span were $17.9 trillion. In essence, our deficit problem is a Medicare and Medicaid problem.” That’s a remarkable insight, I think, and one that puts a new and different light on all talk of “budget cuts” and “balanced budgets.”
National insolvency can be avoided, Anderson writes, by adopting a number of seemingly simple and fair spending reforms. Medicare should be replaced with “premium support,” an idea pushed by conservative think tanks since the early 1990s whereby the elderly seek private insurance with the aid of subsidies. Federal Medicaid funding should become block grants to states with their amounts independent of the state’s level of funding. Retirement ages under Social Security should be gradually increased in pace with life expectancy. Tax reform along the lines suggested by Sen. Rick Scott of Florida would make everyone pay some income tax, giving everyone a stake in how tax dollars are spent. And a constitutional amendment could limit increases in federal spending to the rate of inflation plus two percentage points.
Economist Robert Genetski once told me that solving really big problems produces really big benefits, so the bigger the problems, the bigger the opportunities that arise from them. Adopting any one of the reforms presented by Anderson would generate billions and even trillions of dollars in benefits (in per-capita income or GDP), usually recurring annually into the unforeseeable future. That’s reason to be optimistic about our nation’s debt problem.