June 4, 2018

 In a column in The Wall Street Journal on May 31,  John Kasich, Governor of Ohio, presented an example, as if we needed another,  of the ability to see only that part of reality congenial to one’s political views.  Although the column was captioned , "Entitlements Will Eat America’s Economy," Governor Kasich began by attacking the federal spending bill enacted this year.  The bill "did more than continue to fund the federal government; it also set America on a course to add at least $1 trillion a year to the national debt by 2020."  

 

That is, indeed, a problem and, for him, a dire situation.  If the national debt rises, or even remains where it is now, he warns, it will "strangle economic growth, push interest rates higher and put fiscal well-being and national security at risk."

One could question many of the spending bill’s provisions, such as the usual massive military funding, or perhaps the Governor is unhappy with a more liberal provision.  We don’t know, because he said no more about it, except to assert that Congress must "get serious about meaningful spending restraint and entitlement reforms."  With that segue, spending restraint, whatever that may encompass, leaves the picture, and the real culprits are identified: Social Security, Medicare and Medicaid.

"Why is entitlement reform so important?  Because government spending and increased borrowing — driven by entitlements — continue to gobble up America's gross domestic product, putting economic growth at risk . Without growth, the debt can't be paid down."  Leaving aside whether "entitlements" are the major contributor to debt,  real GDP (adjusted for inflation) has grown every year since 1992 except for 2008 and 2009, devastated by risky banking practices, controls over which are about to become looser.

 Kasich managed to avoid any mention of the tax cuts enacted by the same Congress, which will have a direct impact on deficits and debt.  The balance sheet could be improved by reversing those cuts and, better still, increasing certain taxes; as to the funding of Social Security, begin with eliminating the annual-earnings cap.

However, tax increases will not happen soon; Republicans know only how to cut them.