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The BIG FOUR Enter the Discourse of Debt

Monday April 4th, 2011   •   Posted by Emily Skarbek at 7:13am PDT   •  

No, I am not referring to the Allied Leaders in WWI, college basketball, or the top accounting firms in the U.S. The BIG FOUR of the Budget are Medicare, Medicaid, Social Security and Defense. Together they make up around 65% of non-discretionary spending. Today, the New York Times and Wall Street Journal are running articles whereby the House Budget Committee chairman proposed $4 trillion in spending cuts by reshaping Medicare. Hold your applause.

There are reasons to be optimistic. The discourse in Washington is shifting to draw attention to some of the widely explosive spending figures in the BIG FOUR from the Congressional Budget Office. As the Journal‘s article reports, “Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016.” The fact that the terms of the debate are changing is good, and politicians will begin to use the realities of the figures to their favor:

“There is nobody saying that Medicare can stay in its current path,” Mr. Ryan said on Fox News Sunday. “We should not be measuring ourselves against some mythical future of Medicare that isn’t sustainable.”

The position of Democrats is gradually moving to urge “Republicans to consider reducing some of the automatic annual spending in Agriculture, Treasury and Justice Department programs” rather than cutting spending in discretionary accounts. Both sides are just flirting with the reality that cuts are going to have to come from the BIG FOUR: Medicare, Medicaid, Social Security, and Defense.

Solving the debt crisis means structurally curbing the growth in spending. Doing so is going to require a focus on non-discretionary spending cuts that is not just politically unpopular—it’s practically politically impossible. For now, politicians see this discussion as only setting the stage for the next election.

As for getting the first round of cuts off to a good start, consider a change in procedure. A debt reduction voting rule whereby members of Congress must make a specified amount of reductions but can do so anonymously would ease the political backlash from particular interest groups. Perhaps in this case, a lack of transparency could sugar-coat the medicine.

Finally, Democrats risk missing the boat when it comes to cutting the BIG FOUR. They won’t want to budge on healthcare or Social Security. But given the change in the terms of the debate, they ought to return to advocating an immediate end to foreign interventions and deep cuts in defense spending. Where are all the anti-war protesters so active during the President’s election campaign?

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April 2011