Call me a policy wonk. Call me a politics junkie. Call me crazy. Call me a progressive, a socialist, a fool. Call me whatever you want, frankly I don’t really care. But what I’m about to tell you is the unabashed, unadulterated truth: American fiscal conservatism is an unapologetically implausible ruse; it’s a fairy tale; it’s make believe. There is no such thing. And no matter how much the Trumplican Party preaches the scripture of fiscal conservatism, they are outright lying with every word and breath.
Fiscal Conservatism in Theory
The idea of “fiscal conservatism” is that the Federal Government should tax less and spend less. It’s an idea that looks good on paper, but makes little sense given the modern realities and structure of the United States of America. The reason is that any and all government programme, agency, and office requires a budget that must needs meet the private-sector’s market rate for labour. (In other words: in order to get people to work for the government, you have to pay them a competitive wage!) On top of that, the government operates at an economy of scale that the private sector doesn’t, which is where the government’s savings come from through negotiated rates for goods.
“Fiscal conservatism” is, inherently, a regressive fiscal policy, because it suggests that the government cut or offset any discretionary spending rather than raise taxes and favours the Reagan-era “trickle-down” hypothesis that has been disproven time and time again through experience and practice. What does “regressive” mean here? It means that, across the income spread, taxation starts off high and reduces or regresses as the bracket moves towards higher incomes as a percentage of total income. Basically, poor people pay more in taxes as a percentage of their total income than do rich people. That is regressive tax policy. And that’s what Reagan gave us in the 1980s.
The promise of Ronald Reagan’s “trickle-down economics” hypothesis was that if you tax the rich less, they’ll spend and invest more, which would, in turn, move down through the economy to lower income brackets. “A rising tide lifts all ships” sort of idea. The problem is that it’s utter nonsense! As we have seen time and again, when you tax the rich less, they hoard wealth, effectively removing that wealth from the economy and stagnating wages for lower income brackets. We have lived this reality for thirty years. It’s not that “trickle-down economics” hasn’t been implemented correctly or that it hasn’t been given a proper chance, it’s that it’s complete bullshit. It doesn’t work. It’s a fairy tale of nonsense and lies. Real Talk: Anyone who preaches “trickle-down” policies as solutions for… anything is, in fact, a charlatan and should be ridiculed as such.
Discretionary Spending VS Mandatory Spending
The current argument by the Trumplicans in the House of Representatives of the 118th Congress is that we need to balance the budget—which we do—through enacting a return fiscal conservatism—which doesn’t work. So, what’s the proposition that the Trumplicans are making in order to achieve this return to fiscally conservative policy? They want to reexamine the discretionary budget and force reauthorisation of discretionary programmes and budgets every five years… or every year, if you’re Ron Johnson.
The problem with their proposal is that Trumplicans are… let’s say “confused” by which programmes and budgets are which. They keep trying to treat Social Security, Medicare, and Medicaid—which are mandatory spending—as discretionary spending, and that is incorrect.
The argument has been for decades that we need to cut, reform, or privatise Social Security and Medicare/Medicaid. Multiple excuses have been proposed for this solution in search of a problem over the years, everything from Social Security being fundamentally insolvent and Medicaid breeding “welfare queens” to the return from private investment being better (in the short term) than Social Security offers. All of these arguments are bullshit that aren’t backed up by the data. Nor are they compatible with the spirit of the laws which establish these programmes. And the “welfare queen” story is a racist, classist excuse to punish people for being poor.
Discretionary spending programmes are things like the foreign aid to Ukraine, the entirety of the defence budget, certain VA benefits, NASA, housing credit programmes, law enforcement, international diplomacy, and the federal transportation budget. These are programmes which must be funded and authorised each fiscal year. The numbers change every year and, depending on your values and preferences, are not necessarily obligatory to the functioning of the United States Government.
Mandatory spending programmes are things that are mandated by law, things like Social Security, Medicare, Medicaid, unemployment programmes, disability insurance programmes, the paycheque protection programme, student loan programmes, retirement benefits for military and federal civilian personnel, veterans programmes, and things like the Coronavirus Relief Fund.
In short, a discretionary budget item/programme does not have to be spent because it is not required by law, rather it is authorised by law each year or term. Conversely, a mandatory budget item/programme does have to be spent because it is required by law instead of being authorised each year or term. Make sense? Good.
The defence budget is entirely discretionary spending. Not a dime of it is required by law and all $816.7 billion of this year’s defence budget does not have to be spent. Now, that would mean a dramatic, catastrophic contraction of our national economy due to the defence industry collapsing, the contraction of the military itself, and a sharp and dangerous failure of our national security apparatus pretty much overnight. So… let’s not axe the defence budget to zero right away, yeah? I’m all for reducing our defence budget, but cutting it entirely—or otherwise jeopardising it—is a bad idea for a multitude of reasons.
But the point is, defence is discretionary spending, not mandatory. So, if you’re looking for a budget line to chip away at in order to reduce the overall budget expenditures, look no further!
Social Security, Medicare, & Medicaid
Social Security, Medicare, and Medicaid, on the other paw, are all mandatory spending items, which are required by law, and, interestingly, funded independently of the appropriations process in Congress!
See, these three programmes are funded by a separate tax on your income, which you can see on any pay stub you receive throughout the year, and that money is, supposedly, sacrosanct within the federal budget. In fact, the Social Security Trust Fund had, at the beginning of 2022, $2.85 trillion and is “not projected to become depleted during the 75-year period ending in 2096” as of 2023.
So, all this talk you hear from Trumplicans about Social Security “running out of money” in five, ten, fifteen years or whatever is all bullshit. The SSTF is stable and safe. The programme was constructed and set up wisely, with mechanisms to maintain and sustain itself for the very long term. The only real costs associated with Social Security, Medicare, and Medicaid which aren’t covered by the 6.2% payroll tax everyone pays are the administrative costs—which are discretionary budget items—necessary to actually manage and administer the SSTF funds, you know stuff like people’s salaries and other overhead for the offices in which the employees of the Social Security Administration work.
The point here is that if you’re looking for a budget line to chip away at, you can’t choose this one. So why do Trumplicans keep trying to? Because they hate people. Trumplicans, from the era of Reagan, through the Gingrich years, to the modern Cult of Trump today, are obsessed with the mythology of pulling yourself up by your bootstraps and “rugged individualism.” Nevermind that that’s not how society and civilisation work, they’re going to try forcing it on people anyway!
A Balanced Budget
Did you know that the only time in the last 50 years that the United States of America has had a balanced budget was in the 1990s, during the Clinton Administration? In fact, that’s the only time in the last 50 years that the United States of America has had a budget surplus because we paid off the debt. Imagine that!
Trumplicans are famous for preaching fiscal austerity and conservatism, but spending more than anyone else when they’re in power. In fact, the last three Trumplican presidential administrations are responsible for more discretionary increases in spending than Democratic presidents over the last ten administrations combined!
But a balanced budget can only be achieved, in any meaningful sense, by restructuring the tax code to be more progressive. Our current, regressive tax structure is heavily skewed to favour those who make a lot of money and make it through capital gains, investment returns, and other non-payroll methods. It also caps taxable income brackets far too low. We need to return to—ironically—the tax code we had in the 1950s and 1960s. You know, the era of recent American history that social conservatives are so in love with!
In the 1950s, the wealthiest of income earners paid 91% payroll tax on income of $200k and over. Today, the highest tax bracket is 37% on income over $539k. Adjust for inflation and the purchasing power of the US dollar between 1950 and 2022 and it’s pretty easy to see that we’re getting screwed. No wonder the federal government is running a huge deficit! The Congress has kneecapped the revenue model.
Look, I get it. No one likes paying taxes. But, guess what? We all like the things we get for our tax dollars. Things like roads, bridges, air traffic control, fire fighters, municipal water, libraries, Social Security, national defence, etc. all cost money to provide, and that’s what taxes do.
Featured Image: “Death and Taxes: 2007” by mibi on deviantArt.