Heading Towards the Fiscal Cliff | Brian Riedl & Richard Hanania

Brian Riedl is a senior fellow at the Manhattan Institute, focusing on budget, tax, and economic policy. His previous jobs include chief economist to Senator Rob Portman (R-OH), and positions on the Marco Rubio and Mitt Romney presidential campaigns.

He joins the podcast to talk about the financial future of the United States, with a special focus on entitlements. Medicare is projected to run out by 2031, and Social Security only two years later. Because of politicians kicking the can down the road for so long, this will mean that the federal government will at that point have to either implement massive benefit cuts for seniors or significantly raise taxes across the board.

Brian talks about his experience in Washington, the history of negotiations over the debt, and what politicians say when you bring up these facts. We appear to be in an undesirable equilibrium, where everyone’s incentive is to ignore the issues involved, while the status quo is leading us towards disaster. Despite liberals wanting to tax the rich and conservatives calling for a cut to foreign aid and non-entitlement forms of domestic spending, the numbers for such proposals don’t add up. We will either get entitlement spending under control, or become taxed at the level of Europeans.

In one important way, we will actually be worse off than Europe, because their welfare states pay for services and benefits that go to families across a wide section of the population. We are potentially building a US welfare state that will have high taxes primarily to funnel money to the elderly. The fact that older Americans are richer than those who will be supporting them makes the future we are moving towards even more absurd.

Links

Brian Riedl: chart book on spending, report on the limits of taxing the rich, CNN op-ed on interest rates, NYT op-ed on Biden’s promises on entitlements

Brian’s X page, Manhattan Institute website