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How we Reduce the Deficit is a Moral Issue

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“You don’t know what you have here in America, you know?” said the cabby who drove me home from the airport. When his father died in Ethiopia, he had to drop out of his American university where he was studying computer engineering to start driving cabs to support his family back in Ethiopia. Ethiopia has no social safety net.

“In America,” said my cab driver, “you have services and programs that help keep families together in hard times.” He hasn’t seen his family in nine years. His cab-drivers’ salary is hardly enough to pay for a plane ticket to Ethiopia. Besides, if he takes time off, that would be less food, education, and possible eviction for his mother, brothers and sisters.

While it is true that America has a social safety net, it is weaker than it was just forty years ago and it’s come under more intense attack in recent years. The deficit is the justification for shredding the net now. And extremists are pushing the party that claims a lock on “family values” to nullify the programs that protect at-risk American families from slipping into poverty.

In the name of “fiscal responsibility,” the Tea-Party led House GOP passed H.R. 1956, a bill that takes cash from the hands of America’s poorest working families in order to protect the richest of the rich. HB 1956 requires workers to present a Social Security Number rather than an IRS issued Individual Tax Identification Number to claim the child tax credit. Seems simple enough, but the bill is crafted to target working immigrant families the hardest, even if they are legal residents or have children that are American citizens. The GOP called this a compromise. H.R. 1956 is what they offered in return for the extension of the Payroll Tax cut. Congress could have paid for that extension by ending the Bush era tax cuts for the wealthiest Americans, which were set to expire on January 1, 2012. But the GOP said absolutely not. Instead, they crafted H.R. 1956.

Think about that. The House GOP took cash from the hands of poor children to prioritize tax cuts for the wealthiest Americans.  And now the bill is being considered by the Senate.

According to the non-partisan Center on Budget and Policy Priorities Bush-era tax cuts will be the single largest contributor to America’s long-term debt within seven years. When we add the residual costs of the Iraq and Afghanistan wars, together these two expenses will account for half of the entire U.S. Public Debt (measured as a share of the economy). Check out this graphic.

In a recent emailed statement Ellen Nissenbaum, senior vice president of government affairs for the Center on Budget and Policy Priorities, stated: “In both a legislative and political context, the threats are growing to the core safety net programs that are the most essential to reducing poverty and helping vulnerable families.” Nissenbaum added, “Attacks on SNAP, the refundable tax credits for working families, Medicaid and even on Unemployment Insurance, which obviously is not limited to low-income workers, are growing in the campaign airwaves.” Roadside campaign rhetoric cultivates the climate for post campaign policy-making. If this rhetoric was actual policy at the time of the economic downturn, then millions more people would have fallen into poverty without a safety net in 2010.

We know how to balance the deficit without threatening the lives and livelihoods of poor people and without making middle class and working people more vulnerable to poverty in hard times.

  1. If we ended the Bush-era tax cuts we would cut the long-term deficit by one third over the next seven years.
  2. One of the greatest contributors to the deficit is escalating health care costs and their drain on programs like Medicare and Medicaid. The solution is not to cut aid to hurting people. It is to cut costs. The chief recommendation of the nonpartisan Congressional Budget Office in a 2010 report was the addition of a “Public Plan” to Insurance Exchanges to drive down the cost of health care.
  3. Protection of programs like SNAP/Food Stamps not only protected 2% of the population from falling into poverty in 2010, this program and other safety net programs like it serve as great boosts to depressed economies. Money flows directly from the hands of recipients and into local super markets, farmers’ markets, and convenience stores.
  4. Continue the present administration’s moves to make the military more efficient, nimble, and cost effective.

Budgets are moral documents and how we reduce the deficit is a moral issue.

Nowhere in scripture do we see an example of God instituting or approving policies that snatch money from the hands of poor people to protect the wealthiest individuals and businesses—nowhere. Rather, we see God’s establishment of the Sabbath, the Sabbatical Year, and the Year of Jubilee. All three policies protected the poor and workers and limited the level of wealth that could be amassed by any one individual, family, business, or even by the nation of Israel itself within a generation.

I am not advocating that America becomes a theocracy or adopts these policies verbatim. We are a democratic republic, by and for the people, not a theocracy. What I argue is that these three fiscal public policies offer a window into God’s priorities. In God’s economy people are more important than profit. Under God’s governance food is never ever ripped from the mouths of hungry children in order to line the pockets of the rich. Never.

“Jump” into Deficit Reduction.

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“What’s the sense of having a Republican administration and a Republican Senate if the best we can do is a $200 billion deficit?”

– Republican Senator Bill Armstrong, 1984

1984: the year of my birth, the Macintosh computer, Reagan’s 49-state reelection, and the classic rock anthem “Jump.” Twenty-eight years later, I’m a married man, Republican presidential candidates vie for Reagan’s mantle, and Van Halen has given way to Lady Gaga. And while the latest iPhone is 371% smaller than the original Mac and costs 1254% less, our nation’s deficit has ballooned 659%. Sen. Armstrong’s $200 billion frustration has metastasized to a $1.3 trillion threat.

As yearly deficits become soaring debt, interest payments become a larger portion of government spending. In 2011, taxpayers spent over $454 billion on interest towards the national debt. According to the Washington Post, in 2014 interest payments will surpass what America spends on education, transportation, and energy combined with all other discretionary spending. Deficits and debt can also have dire implications for the economy, including increased interest rates and lack of credit. 

We face a big, complicated problem. Resolving the deficit crisis will mean addressing the tax system, agriculture subsidies, federal pay, defense spending, and more. Yet it’s clear that the most critical issue is entitlement spending.

The rising costs of America’s two largest spending programs, Medicare and Social Security, over the next 25 years will greatly expand the deficit and debt. Spending on these programs is projected to rise 5% in this time at a cost of an additional $750 billion annually. The costs of these entitlements continue to rise, reaching 18% of GDP by 2050. Alone, they account for 90% of the growth in government spending.

The unsustainable growth of entitlement spending is a bipartisan failure. Lawmakers from both parties have failed to address the foreseeable problems because voters have made reform the “third rail” of American politics.

Now is the time to advocate reforms that provide health insurance coverage for seniors and the poor and maintain an income safety net for retirees and the disabled without compromising America’s fiscal future. There’s plenty of debate among policy researchers about what specific combination of reforms will be most effective, but generally we are talking about altering the incentives driving consumer choices.

This means confronting complex questions. For example, a significant portion of Medicare spending occurs during the last year of life. About a quarter of the total budget is spent in that year, 40% of that in the last 30 days of life. In 1997, Medicare paid $26,000 per person in the last year of life, about six times the cost of other beneficiaries.

We can afford to ensure that the elderly and dying receive excellent care, but not by maintaining a system that incentivizes patients to request and physicians to perform expensive procedures in the last days of life. A friend of my family was stricken with pancreatic cancer that eventually invaded her brain, lungs, and bones. Ten days before she died, she received a hip replacement to remove the cancer discovered there. If patients were bearing these costs more directly, it is fair to ask whether different choices would be made. Premium support is one way to bring costs closer to patients that has been advanced by Republicans like Paul Ryan.

Another complexity: the CDC estimates the cost of healthcare spending related to obesity at $147 billion annually. How can we work together to create public policies that incentivize better habits?

The structure of Social Security is based on demographic trends from the Roosevelt era that no longer apply. In 1950 the average retirement age was 68 and average life expectancy was 71. In 2000 the average age of retirement was 62 and life expectancy was 79. That’s a 17-year increase in non-working years of retirees. Furthermore, in 1950 there were 16 workers contributing for every beneficiary; in 2000, the ratio was 3 to 1. These are two main reasons Social Security will be broke within 30 years.

The system was not designed or intended to subsidize such long retirements, especially for those still able to provide for themselves and contribute to society through work. Thanks to increases in technology and health services, and shifts in the nature of the American economy, Americans can – and should be expected to – work longer. Means-testing is an additional potentially beneficial reform. 

The deficit can’t be ignored. It has consequences in both the near and long-term. Many economists argue that deficits impact long-term interest rates, which can hinder continued economic growth. When investors no longer consider a nation a sound investment, borrowing becomes difficult and chaos ensues, as has happened in Greece. Eventually, deficits must be paid. At the very least, deferred debt becomes an increasingly dire problem for future generations. 

Surely we can agree that these basic facts are not good. May the Alternative Political Conversation spark Christians to lead the way in advocating a bipartisan solution to entitlement reform and, in so doing, positively affect America’s broader fiscal future.