Thanks to the debt-ceiling deal that sailed through Congress and was signed Tuesday by President Barack Obama, the federal government will spend slightly less on domestic discretionary programs in 2012 than it did in 2011. This will be the first such annual decrease in federal outlays since the Korean War. There are many reasons for conservatives to be unhappy with the increase in the debt ceiling, but they ought not overlook the very real possibility that it is a milestone in the recognition of the liberal welfare state’s unsustainability.
Make no mistake: It is impossible to balance the budget on discretionary spending cuts alone. Even after $2.1 trillion in spending cuts are implemented, the federal government will still spend almost $2 trillion more in 2021 than it will in 2011. The causes of this unrelenting spending growth are the Social Security, Medicare and Medicaid entitlement programs. In 2011, the federal government will spend $2.1 trillion on these three programs alone. By 2021, that number will reach $3.3 trillion.
The American people understand these welfare programs are unaffordable. According to Gallup, two out of three Americans believe Social Security and Medicare costs are either already creating a crisis for the federal government (34 percent) or will do so within 10 years (33 percent). This reality, however, is just now beginning to sink in for perceptive liberals here and there.
Mother Jones’ Kevin Drum wrote Monday, “The public is mostly in favor of raising taxes on the rich — though I suspect its support is pretty soft — but on the bigger issues they mostly aren’t on our side. They think deficits are bad, they don’t trust Keynesian economics, they don’t want a higher IRS bill (who does, after all?), and they believe the federal government is spending too much on stuff they don’t really understand. Conservatives have just flat out won this debate in recent decades.”
Conservatives have indeed dominated the debate over the liberal welfare state in recent years because the facts are on their side. According to the program’s 2011 Annual Report, Social Security added $46 billion to this year’s deficit and will add $9.1 trillion to the national debt over the long term. Medicare was also in the red by $66 billion this year and will add $24.6 trillion to the debt over the same period. Income tax rates for all Americans would have to double to cover this level of spending. No wonder Americans are turning against the welfare state.
Americans aren’t alone in realizing the welfare state is unsustainable even with confiscatory levels of taxation. The London Telegraph’s Toby Young puts the debt-ceiling deal in a European context: “To focus on the tea party is to ignore the tectonic political shift that’s taken place, not just in America but across Europe. The majority of citizens in nearly all the world’s most developed countries simply aren’t prepared to tolerate the degree of borrowing required to sustain generous welfare programs any longer.” The key question in the days ahead is, what should replace the liberal welfare state as America recovers her financial sanity?