The president signaled a willingness to scale back Medicare, a shift from his 2016 platform of protecting entitlement programs.
WASHINGTON — President Trump suggested on Wednesday that he would be willing to consider cuts to social safety-net programs like Medicare to reduce the federal deficit if he wins a second term, an apparent shift from his 2016 campaign promise to protect funding for such entitlements.
The president made the comments on the sidelines of the World Economic Forum in Davos, Switzerland. Despite promises to reduce the federal budget deficit, it has ballooned under Mr. Trump’s watch as a result of sweeping tax cuts and additional government spending.
Asked in an interview with CNBC if cuts to entitlements would ever be on his plate, Mr. Trump answered yes.
“At some point they will be,” Mr. Trump said, before pointing to United States economic growth. “At the right time, we will take a look at that.”
Mr. Trump suggested that curbing spending on Medicare, the government health care program for the elderly, was a possibility.
“We’re going to look,” he said.
The interview left many questions unanswered, including whether Mr. Trump would consider touching Social Security or what part of Medicare he would be willing to shave. The president veered from answering the question about entitlements to talking about the robustness of the American economy and how his policies have helped alleviate poverty and boost jobs for minorities, perhaps suggesting that the need for entitlement programs at their current levels had waned.
The president has already proposed cuts for some safety-net programs. His last budget proposal called for a total of $1.9 trillion in cost savings from mandatory safety-net programs, like Medicaid and Medicare. It also called for spending $26 billion less on Social Security programs, the federal retirement program, including a $10 billion cut to the Social Security Disability Insurance program, which provides benefits to disabled workers.
Spending on Social Security, Medicare and Medicaid is expected to cost the federal government more than $30 trillion through 2029, according to the Congressional Budget Office.
Mr. Trump’s willingness to consider such cuts marks a shift from four years ago, when he stood out in a field of deficit-minded Republicans in the 2016 primary race with a promise to shield entitlements from cuts.
In a tweet in May 2015, a month before he formally began his campaign, Mr. Trump discussed another Republican’s promises to keep entitlements intact, former Gov. Mike Huckabee of Arkansas.
“Huckabee is a nice guy but will never be able to bring in the funds so as not to cut Social Security, Medicare & Medicaid,” Mr. Trump tweeted. “I will.”
In his formal campaign announcement that year, he said, “Save Medicare, Medicaid and Social Security without cuts. Have to do it. Get rid of the fraud. Get rid of the waste and abuse, but save it.”
Democrats are also wrangling over entitlement programs, which are among the fastest growing federal expense. Senator Bernie Sanders from Vermont and former Vice President Joseph R. Biden Jr. have been arguing for days over Mr. Biden’s past comments about cuts to Social Security, a reminder of how sensitive the issue is for voters.
Republicans have largely avoided talking about rolling back entitlement programs since Mr. Trump became president, assuming that doing so would be a non-starter. Following the $1.5 trillion tax cut that Republicans passed in 2017, some suggested that they would quickly turn to reduce the cost of Social Security, Medicare and Medicaid.
Those ideas gained little traction and federal spending has continued to grow.
The Treasury Department said last week that the federal budget deficit surpassed $1 trillion in 2019. It was the first calendar year since 2012 that the deficit topped that threshold. To help finance deficits, which require the government to sell debt, the Treasury Department plans to begin issuing 20-year bonds.
Other Trump administration officials have been more careful in discussing the need to cut spending on entitlement programs. Treasury Secretary Steven T. Mnuchin demurred earlier this month when pressed on CNBC about how to scale back spending on entitlements.
“All I’m going to say is that we talked about there needs to be bipartisan review of government spending and that’s something at the appropriate time we’ll look at,” Mr. Mnuchin said.
His race-baiting is impulsive and unpopular, not a brilliant strategy to win white votes.
Some columns spring from inspiration, some from diligent research. And some you’re prodded into writing because of what the other columnists are arguing about.
This is the third kind. With the Democratic debates in the spotlight, there has been a lot written on this op-ed page about the Democratic Party’s ideological evolution, its leftward march on many issues, and how this might help Donald Trump win re-election. Which in turn has prompted a recurring argument from certain of my liberal colleagues that anyone writing about the supposedly extremist Democrats should be writing about Trump’s extremism and unpopularity instead.
So this will be, as requested, a column about Trump’s extremism and unpopularity. But it’s not going to be a mirror image of the columns about the Democrats’ move leftward, because I don’t think policy substance matters as much to Trump’s prospects as it might to the party trying to unseat him.
It matters less because Trump in 2020 won’t be a change candidate. Instead, like every incumbent, he’ll be a candidate of the policy status quo — only much more so in his case, because his legislative agenda dissolved earlier than most presidents and the prospects for continued gridlock are obvious.
That means Trump probably won’t be campaigning on what he promised across 2016 — the kind of infrastructure-building, “worker’s party” conservatism whose ambitions vanished with Steve Bannon. But he also won’t be campaigning on the Paul Ryan agenda that the Republican Congress pushed in his first year, or reviving unpopular Ryan-era ideas like entitlement reform on the 2020 trail.
Instead Trump’s policy argument in 2020 will be, basically, let’s keep doing what we’re doing. That status quo includes a
- deregulatory agenda,
- a tariff push and a
- harsh border policy that are all unpopular.
But it also includes:
- free-spending budgets,
- easy money and a more
- anti-interventionist (for now) foreign policy than past Republicans, all of which are relatively popular.
And in the context of a strong economic expansion, a Trump re-election effort that rested on this record while warning against Democratic radicalism could be plausibly favored.
Except that this isn’t the kind of campaign that Trump himself wants to run. He wants the
- racialized Twitter feuds, the
- battles over Baltimore and Ilhan Omar, the
- media freak-outs and the
- “don’t call us racist!” defensiveness of his rallygoing fans.
He feeds on it, he loves it, and he’s as obviously bored by the prospect of a safe, status-quo campaign as he is obviously uninterested in the conservative intellectuals trying to transform Trumpism into something intellectually robust.
And here I agree with the left that there’s a media tendency to give Trump’s race-baiting impulses more credit as a strategy than they actually deserve. After each Twitter outburst his advisers try to retrofit a strategic vision, to claim there’s a master plan unfolding in which 2020 will become a referendum on Omar’s anti-Semitic tropes or the Baltimore crime rate. And the press gives them credence out of an imprinted-by-2016 fear that the president has a sinister sort of genius about what will help him win.
But this is paranoia, and the retrofitting is Trumpworld wishful thinking. There was, yes, a sinister genius at work when Trump used birtherism to build a primary-season constituency in 2016. But since then, his race-baiting has clearly contributed to his chronic unpopularity, and his re-election chances would almost certainly be far better if he talked like George W. Bush on race instead.
Second, in 2016 Trump won many millions of voters who disapproved of him. But in recent 2020 polling, Trump is performing below his job approval rating in many head-to-head matchups, which suggests that voters who would be responsive to the “policy status quo” argument keep getting turned off by the president’s rhetoric. The supposedly-brilliant strategy of racial polarization, then, is probably just a self-inflicted wound.
None of this means that Trump cannot be re-elected. But it means that if he wins again, it will likely be in spite of his own rhetoric, not as the dark fruit of a white-identitarian campaign.
In this sense both NeverTrump-conservative and liberal columnists can be right about the basic situation. The liberals are right that Trump is defiantly outside the mainstream — that every day, in a particular way, he proves himself extreme.
But this is a fixed reality for 2020, and the NeverTrump side is right about the variable: The campaign may turn on how successfully the Democrats claim or build an anti-Trump center, as opposed to appearing to offer an unpalatable extremism of their own.
it’s useful to understand how the systemworks and the key turning point is avery remarkable period it’s WilliamJennings Bryan William Jennings Bryan in1896 was a fairly young 36 year oldNebraskan who got up in the middle ofthat particular I guess you could sayAssociation of then the Democratic Partyand it was the one of thoseextraordinary events which turnspolitics around the Democratic Party wasa highly conservative party prior tothem and essentially it’s characterizedby presidents who thought that the leastgovernment the best it was essentiallylazy fair he got up Bryan got up andmade this extraordinary speech which isnow historical and then cross of goldspeech about the American worker and theAmerican farmer of being crucified on across of gold called being the goldstandard and that propelled himstrangely enough into the head of theparty he got nominated he never becamepresident because he kept losingyou think he went three times and failedeach time but left a very majorindelible stamp which led to WoodrowWilson and all the way through toFranklin Roosevelt and I you know Ilooked at Bryan as the root of FranklinRoosevelt’s New Dealthat’s fascinating cause I think mostpeople that part of it’s often beingobscured in history it’s again one ofthe reasons why this book is sointeresting is it throws up thesecreating the existing tax pattern [M]yview is that that’s the right thing todo provided you funded the result ofthat is a bit of variance is going to bea very large federal budget deficit andfederal budget deficits invariably downthe road out qualification in genderinflation at the moment we have thetightest labor market I have ever seenthat is the number of job openings issignificantly greater than the number ofpeople looking for work and that mustinevitably begin to push on wages italways has and always will but it’salways delayedand my told you that is something hasgot to give and that’s I don’t knowwhere it all comes out well your blyatcomes out with inflation well theproblem basically is if we do nothingwe’re going to end up with probablystagflation which is an inflation rate Ishould say it’s partly stagnation whichas mentioned was very significantlyslowed output per our output per hournow which used to be 3/4 percent peryearback in the early post-world war iiperiod it’s now well under 1% whichbrings me very nicely on to the nextquestion from the audience which issomeone has asked for you to share yourthoughts about president Trump’s recentcriticism of Jay Powell and the Fed Ilike him to answer that with all theanswers I think it’s very short-sightedthe issue of the Federal Reserve isrequired by the Congress to maintain astable currency which means no inflationno deflation and the policy they’reembarked upon at the moment seems verysense it will be caused as I mentionedbefore the wage rates are beginning toshow signs of moving and you cannot havereal wages rising without it ultimatelythink if they continue on the road wouldthat we willgoing Pretlow I should say that thepresident wants to go we’re gonna end upwith a very significant budget deficitand very significant inflationultimately not not in the short termthat it takes a whilepolitical system doesn’t care aboutdeficits what they do care about isinflation when the inflation rate was 4%in the 1970sPresident Nixon imposed wage and pricecontrols were nowhere near there yet butit’s wrong our wayif we are though heading towards apotential rise in inflation rise in debtat a time of growing populism do youthink there’s a chance that the FederalReserve will lose independence I’mtrying to follow you which I mean wellcheating is a chance at Congress or thepresident will try to control theFederal Reserve or take away some of itsindependence I really don’t know one ofthose forecasting aspects which isdifficult another question from theaudience as the Federal Reserve’s reachgrows do you think that leged ofoversight will become necessary againthat’s above my pay gradeor do you think that Congress shouldexert more control or oversight of theFed I think the Federal Reserve is bystatuteremember the Federal Reserve Act of 1913which essentially did something veryunusual we had a long period wediscussed this in the book in whichfinancial crises kept surging up andthen collapsing which is a typical cyclewithwhich went on to a decade upon decadeand the populism that evolved as aconsequence of this looked atever-increasing lead to find a way tosolve the problem of why the crisesoccur and the general solution was ifthe economy is accelerating and it’srunning out of gold species and you’regoing to get into a situation in whichthey are always going to be crises sowhat the Federal Reserve Act actuallydid was very very interesting itsubstituted the sovereign credit of theUnited States for gold and then if no westayed on the gold standard technicallythat was a major change in Americanfinancial history and debate the basicconsequence of that is that FederalReserve determines what in effect is asensible level of money supply expansionand one of the reasons the FederalReserve Act was actually passed was toprevent the political system whenbecoming so very dominant in determiningmonetary policy which is exactly whatyou don’t want to happen and I mean Iwas you know eighteen and a half yearsas you mentioned getting letters fromeverybody who won very littlecongressmen or otherwise who wants it’sa the issue of and don’t worry about theissue of inflationand nobody was well when I would begetting people who say we want lowerinterest rates I got tons of that mail Inever got a single letter saying pleaseraise them and it tells you that thereare some views which go against realityand reality always wins but if you lookat that the history of populism some ofthe worst populism you got was in the1970s some of the work that the angerthat was generated by inflation in thenineteen seventies were roiled right theway through the political systemeventually leads to the rise of ofRonald Reagan because and who comes inand then you know crushes crushesinflation so inflation is is not asolution to populism it drivers it makespeople very angry do you think thecurrent populism is going to get worsechairman Greenspan well let’s rememberwhere populism comes from it’s I don’tknow whether this is a generalproposition but I find it’s difficult toget around the answer that when theinflation rate or that must theinflation ratings as much as the levelsof income slow down when you getproductivity for example which is thatthe major determinant of income and youget productivity slowing down you get amuch lower increase in JD GDP and grossdomestic income and wages and salariesalike and there’s a great deal of uneasein the population which is saying thingsare not good somebody come help us andsomebody necessarily on the white horsebecause comes up and says I’ve got a wayto handle this and if you look at LatinAmerica the history ofgoodly part of Latin America is aremarkable amount of people like Peroncoming in and all the subsequent postWorld War two governments in LatinAmerica and it’s really quiteunfortunate and surprising it’s not thatthey try it and it fails which it doesalways it always fails but it doesn’teliminate the desire to do it in otherwords of Peru Brazil and like they’veall undergone very significant periodsof huge inflation and collapsing andnobody wears a lessonyeah well we’re almost out of time butthere’s one other question from theaudience which I think cuts to the heartof a lot of what we’re talking aboutright now which is this does the successof capitalism come at the cost ofenormous wealth disparity is it possibleto have this vision of creativedestruction of capitalism of dynamismwithout having massive income inequalityI doubt it and I doubt it for the reasonI said earlier namely that we’ve got theproblem that human beings don’t changebut technology as it advances and it’sembodied in the growth of an economy isalways growing and when you havesomething that’s growing and the otherthing that’s flat you get obviouslyinequality and the politicalconsequences of that can I qualify thatjust a little bit I mean there – thereare different sorts of inequalitythere’s a there’s the inequality thatyou get from suddenly like Bill Gates orSteve Jobs producing a fantastic newinnovation and idea which means thatthey reap a lot of rewardfor that but which means that society asa whole gets richer and better off andthere’s the inequality that comes fromcrony capitalism from people usingpolitical influence blocking innovationand and sucking out and do rewards forthemselves so I think we need to beabsolutely very very sensitive to thewrong source of inequality whilecelebrating the right sort of inequalityand also had that Joseph Schumpeter thatgreat man once said that the the natureof capitalist progress doesn’t consistof Queens having a million or twomillion pairs of silk stockings itconsists of what used to be theprerogative of a queen being spreadthroughout the whole of society silkstockings you know that become somethingthat go from being very rare and onlyworn by Queens to being worn by allsorts of people all over the place soit’s the nature of capitalism is tocreate new innovations which are atfirst rare but spread throughout thewhole of society and everybody uses soif you think think of the the iPhone orsomething like that some that wassomething that was incredibly rare and afew people had those sort ofcommunications vais now everybodycarries them around all the time and thegreat capitalists the Bill Gates theSteve Jobs don’t get rich by selling onereally really good iPhone to one purposeand they get into selling their productsto all sorts of people so there’s asense in which there is no realtrade-off between very rich peoplegetting very rich and the rest ofsociety getting getting better off youknow they only get rich because theycreate things which everybody mostpeople want to have and buy you knowit’s it’s it’s it’s the Silk Stockingquestion really I you know I accept thatqualifications let me just say one thingyou going back to his mentioning hereWalter Isaacson’s book on innovation hewrote that book and I remember readingit and my final conclusion was and Iasked him why is it that most innovationis in the United Statesit’s American and he said you know I’venever thought of that I don’t think hewas aware of the fact that he here andall these innovationto developers and they all turned out tobe American which leads me to concludethat there’s something fundamental inthe psyche of American history in theAmerican public which creates it it’snot an accident which is why I won in itwho too often so which is what you ofcourse you sought to explain the book soif you had a chance to take this bookinto the Oval Office today or into theTreasury and give it to the Presidentand say this is a history of Americahere are the key lessons what is a topbit of advice that you would give to theadministration today to keep capitalismgrowing in America well you know we dohave we haven’t mentioned that there’san underlying financial problem which wehaven’t addressed in the best way todiscuss it as when I first became awareof itI would haven’t been looking at data andaccidentally created a chart whichshowed the relationship betweenentitlements spending which is socialbenefits in the rest of the world andgross domestic savings and I’m from 1965to the current period the ratio ofentitlements to the sum of those two isflat as a percent of gross domesticproduct which means or at least impliesthat one is crowding out the other andwhen you look at the individuals theyare actually looking different andenable one goes up the other goes downand so forth and I think that’ssuggestively the fact that there issomething in the sense of when we saythat entitlements by which a rising andthe baby boom generation is essentiallycrowding out gross domestic savingswhich in turn coupled withthe borrowing from abroad is how wefinance our gross domestic investmentwhich is the key factor in productivityright so entitlement reform well I lookforward to a tweet about entitlementreform I look forward to this veryimportant book being part of thediscussion about how to keep AmericaAmerica’s economy great and growing butin the meantime thank you both very muchindeed for sharing your thoughts it isindeed a fascinating book and quite anachievement and best of luck in gettingthis very important message out so thankyou both very much indeed[Applause]
Robert Reich explains why the growing federal debt enriches Wall St. bankers and wealthy Americans.