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Trump keeps ignoring the biggest economic crisis of our generation

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If you turn on the cable networks then chances are you see nonstop coverage of the special counsel investigation, analysis of every tweet by Donald Trump, or efforts to downplay the recent economic boom. What is missing is the coming specter of an existential entitlement crisis. Make no mistake, this looming budget calamity will be a severe threat to our future at every level and for almost every household in the nation. Where are the news reports and opinion pieces like the ones we see about climate change or the government darkness that threatens to kill democracy?

Trump broke the typical Republican mold in more ways than one during his 2016 presidential run. But perhaps the starkest contrast between the New York billionaire and other Republicans was his promise not to cut Social Security or Medicare, entitlement programs headed for bankruptcy in the coming years. But Trump also made promises of massive spending hikes for infrastructure and a border wall. Like the media, his attention is misplaced, as is that of Congress. Immediate reforms are necessary to prevent a fiscal fiasco that will mirror the European Union crisis a decade ago or the forerunning of the French Revolution. Indeed, it is that serious.

{mosads}Republicans seeking office all too often rail about the dangers of our $21 trillion debt. However, this debt coupled with unfunded liabilities, or the difference between projected tax revenue and expected government spending, will be catastrophic. The vast majority of these unfunded liabilities are tied to Social Security, Medicare, and public pensions. Overall federal unfunded liabilities are over $115 trillion, which amount to $947,000 per taxpayer. State unfunded liabilities add trillions more, including $6 trillion in unfunded public pensions alone. According to data from the federal government, Social Security will hit insolvency by 2034. Medicare is in even worse shape, set to be insolvent by 2026. These two major programs at present make up 40 percent of the federal budget.

Recent actions have only made the problem worse. The Affordable Care Act pulled more than $800 billion from Medicare funding for spending on a new entitlement. The failed efforts of George Bush to reform Social Security in 2005 was based on a pressing fear that the Social Security trust fund would expire by 2043. Today we are looking at a worse outlook just 16 years from now with 10,000 Baby Boomers retiring each day. Both the dollar amount and percent of gross domestic product of these expenses will expand dramatically over our generation, resulting in either sharp tax increases or sharp benefit drops if no compromise is found.

Trump will either be remembered as the president who solved the most pressing budget issue of the next 50 years or just another that kicked the can down the road, and at a worse point politically than Barack Obama, who could claim the crisis was decades away. When Obama exploded deficits to $1 trillion, Republicans rightly crowed. Now Trump is adding to one of the major drivers of that deficit, contributing to a similar result.

The Democrats will be critical of Trump regardless of what he does on entitlements. Even though the administration announced that Social Security recipients will have their largest increase in recent years, the left still accuses the president of making heartless cuts to Medicare and Social Security. Trump faces heat no matter what he does, so he may as well take the political risk of cuts for a much greater practical victory. With the Medicare and Social Security trust funds expiring, the president has a chance to play to both the desire of Democrats for increased spending on infrastructure and the desire of Republicans to reduce the deficit.

A grand bargain with Congress could offer some upfront transportation funding in exchange for a wider entitlement reform package. Perhaps it could come as $1 trillion in infrastructure spending over 10 years coupled with an expiration of tax credits for the wealthy shielded from a large portion of Social Security taxes and entitlement rates tied to consumer inflation. Unlikely? Sure. Necessary? You bet. If there is one person in recent history willing to take a risk for principles, it is this president.

Trump has an opportunity to dust off his reputation as a dealmaker with members of Congress when the chamber is divided in the new year. He ran against changes to entitlements, but he has a “Nixon goes to China” opportunity. Trump has a unique ability to identify issues and speak directly to the American people about potential solutions. A combination of ideas will be necessary, from partial privatization, to chaining benefits to inflation, to new revenue streams without higher tax rates. Each of these runs anathema to the establishment. But since when has Donald Trump been one to do simply what the establishment wants him to do?

Kristin Tate is a libertarian writer and author of “How Do I Tax Thee? A Field Guide to the Great American Rip-Off.” Follow her on Twitter @KristinBTate.

Tags Barack Obama Congress Donald Trump Finance Kristin Tate Policy White House

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