Three years ago in 2014, PragerU released two videos by Michael Tanner an author and senior fellow at the CATO Institute with both videos sharing a similar goal. The first video is titled “America’s Debt Crisis Explained” and the second is titled “How To Solve America’s Spending Problem.” The first video is just a video to explain the problem and the second video elaborates by offering a more in depth solution.
In the second video Michael Tanner begins by pointing straight to the size of the debt which at the time of the video was over 17 trillion dollars but is now almost 20 trillion dollars and blaming a very significant portion of this on the three legacy programs which are Medicare which he refers to as “a government health insurance program for people over 65”, Medicaid which he refers to as “a government health assistance program for people who can’t afford to buy insurance”, and Social Security which he refers to as “a government pension program for people over 65”. He admits that the picture is somewhat more nuanced because the government also spends a lot of money on other programs such as food stamps, education, unemployment benefits, etc. but presses on that the three legacy programs are at the center of the problem.
When looking at defense spending he points out that although defense spending is significant, it makes up a smaller share of the budget than it has historically citing the fact that between 1970 and 2012 the percentage of the federal budget dedicated to defense was cut in half. Futhermore, in that same period the portion of the budget that is composed of discretionary spending meaning that the money must be appropriated to be spent went from 62% of the budget to a mere 36%.
He then refers to the age of the programs citing Social Security as beginning in 1940 (the Social Security Act was signed into law in 1935 but the first social security check was not received until 1940) and Medicare/Medicaid beginning in the 1960s. Going on most likely in an attempt to show that although it is Democrats fault for making these programs, Republicans have been remarkably complacent he mentions that all three programs were greatly expanded in 1972 under President Nixon. Now having mentioned these dates he cites Congressional Budget Office statistics where he demonstrates that in 1970 the three legacy programs accounted for 22% of federal spending yet by 2012 that number nearly doubled to 42%. To give an example to demonstrate his point he cites the fact that Medicare part B which covers doctors services was originally projected to have an annual cost of $500 million a year yet in 2012 it cost $164 billion. He then asks a question to the audience about the three legacy programs which is “how are we going to pay for them?” He then goes back to another estimate by the CBO which is that in 40 years the three legacy programs and the ACA will literally cost more than the entire federal revenue meaning that in order to spend on significantly more important things like the departments of defense, justice, state, and treasury the United States would have to borrow money.
He says that although taxes could be raised to pay for this the tax rates would have to significantly rise especially on the middle class which would lead to a less free population and slower economic growth. Then reaffirms that the taxes would have to come from the middle class because even if the U.S. government were to implement a 100% tax on everyone making over a million dollars that would only give the government about $600 billion and it could only be done once. The second answer he points to that would not require these massive tax rates is spending cuts with regards to the three legacy programs although when he says spending cuts he doesn’t even mean what most people would consider a spending cut he means what Washington D.C. bureaucrats and politicians consider a spending cut which basically means that spending still rises just at a slower rate. As a way to start this Mr.Tanner proposes raising the age at which individuals receive social security benefits pointing to the fact that in 1940 the average lifespan was 64 yet today the average life expectancy is 80 and the law should reflect that change.
Once he mentions that he concludes the video by telling the audience So the next time a politician proposes a generous new government benefits program, the first question should be “where is the money going to come from to pay for it?” and if he or she is honest, there is only one answer: “from you.”