CSPI Podcast

Heading Towards the Fiscal Cliff | Brian Riedl & Richard Hanania

Nov 20, 2023

Brian Riedl, a senior fellow at the Manhattan Institute, and Richard Hanania discuss the financial future of the US, with a focus on entitlements. They explore the projected fund shortages of Social Security and Medicare, the potential consequences of borrowing money indefinitely, and the lack of seriousness in fiscal policy. The speakers highlight the challenges of raising the payroll tax limit, the inefficiency of Twitter, and the ongoing debt ceiling negotiations.

54:04

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Episode guests

Brian Riedl

Richard Hanania

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Episode notes

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Quick takeaways

Social Security and Medicare are projected to run out within the next decade, leading to the need for either massive benefit cuts or increased taxes.

Addressing the entitlement crisis requires a combination of program reforms, middle-class tax increases, and healthcare reforms.

The lack of bipartisan agreement and the fear of losing elections hinder progress in tackling the imminent entitlement crisis.

Deep dives

The Urgent Need to Address Entitlement Programs

There is a growing concern about the long-term viability of entitlement programs such as Social Security and Medicare, driven by factors like the retiring baby boomer population, rising healthcare costs, and increasing interest rates. The deficit continues to rise, and if no action is taken, it could lead to a debt crisis and drastic benefit cuts or increased taxes for the middle class. Despite the urgency of the issue, there is a lack of serious engagement and solutions from both the left and the right, with politicians avoiding necessary reforms due to political reasons.

Introduction

3min

Borrowing Money Indefinitely for Social Security and Medicare

16min

The Future Funding Issues of Social Security and Medicare

10min

Implications of Raising the Payroll Tax Limit on Tax Rates for the Rich

2min

The Lack of Seriousness in Fiscal Policy

18min

The Inefficiency and Unpredictability of Twitter

3min

Debt Ceiling Negotiations and Political Cynicism

2min

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

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