Trump Opens Door to Cuts to Medicare and Other Entitlement Programs

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.

Donald Trump Is Not a Sinister Genius

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.

Capitalism in America: Alan Greenspan and Adrian Wooldridge in Conversation with Gillian Tett

it’s useful to understand how the system
works and the key turning point is a
very remarkable period it’s William
Jennings Bryan William Jennings Bryan in
1896 was a fairly young 36 year old
Nebraskan who got up in the middle of
that particular I guess you could say
Association of then the Democratic Party
and it was the one of those
extraordinary events which turns
politics around the Democratic Party was
a highly conservative party prior to
them and essentially it’s characterized
by presidents who thought that the least
government the best it was essentially
lazy fair he got up Bryan got up and
made this extraordinary speech which is
now historical and then cross of gold
speech about the American worker and the
American farmer of being crucified on a
cross of gold called being the gold
standard and that propelled him
strangely enough into the head of the
party he got nominated he never became
president because he kept losing
you think he went three times and failed
each time but left a very major
indelible stamp which led to Woodrow
Wilson and all the way through to
Franklin Roosevelt and I you know I
looked at Bryan as the root of Franklin
Roosevelt’s New Deal
that’s fascinating cause I think most
people that part of it’s often being
obscured in history it’s again one of
the reasons why this book is so
interesting is it throws up these
creating the existing tax pattern [M]y
view is that that’s the right thing to
do provided you funded the result of
that is a bit of variance is going to be
a very large federal budget deficit and
federal budget deficits invariably down
the road out qualification in gender
inflation at the moment we have the
tightest labor market I have ever seen
that is the number of job openings is
significantly greater than the number of
people looking for work and that must
inevitably begin to push on wages it
always has and always will but it’s
always delayed
and my told you that is something has
got to give and that’s I don’t know
where it all comes out well your blyat
comes out with inflation well the
problem basically is if we do nothing
we’re going to end up with probably
stagflation which is an inflation rate I
should say it’s partly stagnation which
as mentioned was very significantly
slowed output per our output per hour
now which used to be 3/4 percent per
back in the early post-world war ii
period it’s now well under 1% which
brings me very nicely on to the next
question from the audience which is
someone has asked for you to share your
thoughts about president Trump’s recent
criticism of Jay Powell and the Fed I
like him to answer that with all the
answers I think it’s very short-sighted
the issue of the Federal Reserve is
required by the Congress to maintain a
stable currency which means no inflation
no deflation and the policy they’re
embarked upon at the moment seems very
sense it will be caused as I mentioned
before the wage rates are beginning to
show signs of moving and you cannot have
real wages rising without it ultimately
think if they continue on the road would
that we will
going Pretlow I should say that the
president wants to go we’re gonna end up
with a very significant budget deficit
and very significant inflation
ultimately not not in the short term
that it takes a while
political system doesn’t care about
deficits what they do care about is
inflation when the inflation rate was 4%
in the 1970s
President Nixon imposed wage and price
controls were nowhere near there yet but
it’s wrong our way
if we are though heading towards a
potential rise in inflation rise in debt
at a time of growing populism do you
think there’s a chance that the Federal
Reserve will lose independence I’m
trying to follow you which I mean well
cheating is a chance at Congress or the
president will try to control the
Federal Reserve or take away some of its
independence I really don’t know one of
those forecasting aspects which is
difficult another question from the
audience as the Federal Reserve’s reach
grows do you think that leged of
oversight will become necessary again
that’s above my pay grade
or do you think that Congress should
exert more control or oversight of the
Fed I think the Federal Reserve is by
remember the Federal Reserve Act of 1913
which essentially did something very
unusual we had a long period we
discussed this in the book in which
financial crises kept surging up and
then collapsing which is a typical cycle
which went on to a decade upon decade
and the populism that evolved as a
consequence of this looked at
ever-increasing lead to find a way to
solve the problem of why the crises
occur and the general solution was if
the economy is accelerating and it’s
running out of gold species and you’re
going to get into a situation in which
they are always going to be crises so
what the Federal Reserve Act actually
did was very very interesting it
substituted the sovereign credit of the
United States for gold and then if no we
stayed on the gold standard technically
that was a major change in American
financial history and debate the basic
consequence of that is that Federal
Reserve determines what in effect is a
sensible level of money supply expansion
and one of the reasons the Federal
Reserve Act was actually passed was to
prevent the political system when
becoming so very dominant in determining
monetary policy which is exactly what
you don’t want to happen and I mean I
was you know eighteen and a half years
as you mentioned getting letters from
everybody who won very little
congressmen or otherwise who wants it’s
a the issue of and don’t worry about the
issue of inflation
and nobody was well when I would be
getting people who say we want lower
interest rates I got tons of that mail I
never got a single letter saying please
raise them and it tells you that there
are some views which go against reality
and reality always wins but if you look
at that the history of populism some of
the worst populism you got was in the
1970s some of the work that the anger
that was generated by inflation in the
nineteen seventies were roiled right the
way through the political system
eventually leads to the rise of of
Ronald Reagan because and who comes in
and then you know crushes crushes
inflation so inflation is is not a
solution to populism it drivers it makes
people very angry do you think the
current populism is going to get worse
chairman Greenspan well let’s remember
where populism comes from it’s I don’t
know whether this is a general
proposition but I find it’s difficult to
get around the answer that when the
inflation rate or that must the
inflation ratings as much as the levels
of income slow down when you get
productivity for example which is that
the major determinant of income and you
get productivity slowing down you get a
much lower increase in JD GDP and gross
domestic income and wages and salaries
alike and there’s a great deal of unease
in the population which is saying things
are not good somebody come help us and
somebody necessarily on the white horse
because comes up and says I’ve got a way
to handle this and if you look at Latin
America the history of
goodly part of Latin America is a
remarkable amount of people like Peron
coming in and all the subsequent post
World War two governments in Latin
America and it’s really quite
unfortunate and surprising it’s not that
they try it and it fails which it does
always it always fails but it doesn’t
eliminate the desire to do it in other
words of Peru Brazil and like they’ve
all undergone very significant periods
of huge inflation and collapsing and
nobody wears a lesson
yeah well we’re almost out of time but
there’s one other question from the
audience which I think cuts to the heart
of a lot of what we’re talking about
right now which is this does the success
of capitalism come at the cost of
enormous wealth disparity is it possible
to have this vision of creative
destruction of capitalism of dynamism
without having massive income inequality
I doubt it and I doubt it for the reason
I said earlier namely that we’ve got the
problem that human beings don’t change
but technology as it advances and it’s
embodied in the growth of an economy is
always growing and when you have
something that’s growing and the other
thing that’s flat you get obviously
inequality and the political
consequences of that can I qualify that
just a little bit I mean there – there
are different sorts of inequality
there’s a there’s the inequality that
you get from suddenly like Bill Gates or
Steve Jobs producing a fantastic new
innovation and idea which means that
they reap a lot of reward
for that but which means that society as
a whole gets richer and better off and
there’s the inequality that comes from
crony capitalism from people using
political influence blocking innovation
and and sucking out and do rewards for
themselves so I think we need to be
absolutely very very sensitive to the
wrong source of inequality while

celebrating the right sort of inequality
and also had that Joseph Schumpeter that

great man once said that the the nature
of capitalist progress doesn’t consist
of Queens having a million or two
million pairs of silk stockings it
consists of what used to be the
prerogative of a queen being spread
throughout the whole of society silk
stockings you know that become something
that go from being very rare and only
worn by Queens to being worn by all
sorts of people all over the place so
it’s the nature of capitalism is to
create new innovations which are at

first rare but spread throughout the
whole of society and everybody uses so
if you think think of the the iPhone or
something like that some that was
something that was incredibly rare and a
few people had those sort of
communications vais now everybody
carries them around all the time and the
great capitalists the Bill Gates the

Steve Jobs don’t get rich by selling one
really really good iPhone to one purpose
and they get into selling their products
to all sorts of people so there’s a
sense in which there is no real
trade-off between very rich people
getting very rich and the rest of
society getting getting better off you
know they only get rich because they
create things which everybody most
people want to have and buy you know
it’s it’s it’s it’s the Silk Stocking
question really I you know I accept that
qualifications let me just say one thing

you going back to his mentioning here
Walter Isaacson’s book on innovation he
wrote that book and I remember reading
it and my final conclusion was and I
asked him why is it that most innovation
is in the United States
it’s American and he said you know I’ve
never thought of that I don’t think he
was aware of the fact that he here and
all these innovation
to developers and they all turned out to
be American which leads me to conclude
that there’s something fundamental in
the psyche of American history in the
American public which creates it it’s
not an accident which is why I won in it
who too often so which is what you of
course you sought to explain the book so
if you had a chance to take this book
into the Oval Office today or into the

Treasury and give it to the President
and say this is a history of America
here are the key lessons what is a top
bit of advice that you would give to the
administration today to keep capitalism

growing in America well you know we do
have we haven’t mentioned that there’s
an underlying financial problem which we
haven’t addressed in the best way to
discuss it as when I first became aware
of it
I would haven’t been looking at data and
accidentally created a chart which
showed the relationship between
entitlements spending which is social
benefits in the rest of the world and
gross domestic savings and I’m from 1965

to the current period the ratio of
entitlements to the sum of those two is
flat as a percent of gross domestic
product which means or at least implies
that one is crowding out the other and
when you look at the individuals they
are actually looking different and
enable one goes up the other goes down
and so forth and I think that’s
suggestively the fact that there is
something in the sense of when we say
that entitlements by which a rising and
the baby boom generation is essentially
crowding out gross domestic savings
which in turn coupled with
the borrowing from abroad is how we
finance our gross domestic investment
which is the key factor in productivity
right so entitlement reform well I look
forward to a tweet about entitlement
reform I look forward to this very
important book being part of the
discussion about how to keep America
America’s economy great and growing but
in the meantime thank you both very much
indeed for sharing your thoughts it is
indeed a fascinating book and quite an

achievement and best of luck in getting
this very important message out so thank
you both very much indeed