As the Reagan revolution four decades ago launched US society down the path to low taxes and meager solidarity, perhaps the Republican bloodbath last week could turn US politics toward building a new social contract anchored on an aspiration to equitable prosperity.
uncertain
bloodbath → launch → prosperity
One can sense the ambition of the bumper new crop of Democrats ushered to power last week, calling for support for programs for children and their parents; emphatically endorsing the long-held dream of Medicare for All.
asserted
One → sense → All
The project includes rolling back Donald Trump’s cuts to Medicaid and food stamps, and restoring subsidies for health insurance under the Affordable Care Act that Republicans allowed to expire.
asserted
Republicans → include → Act
And that’s just the start.
asserted
that → ’ → ?
Early odds suggest a Democrat may win the presidential election in two years, a fitting coda to last week’s broad rejection of the Maga brand of politics.
uncertain
Democrat → suggest → politics
It’s not beyond hope to expect a Democratic trifecta that will spend less time on settling grievances and more on fixing a threadbare social safety net that allows for the deepest poverty in the affluent world.
asserted
that → ’ → world
And yet, the post-election wish list is about to run into harsh fiscal reality: there is no money.
asserted
list → run → reality
The federal deficit is now running at about 6.2% of GDP.
asserted
deficit → run → GDP
The federal debt hit $40tn, more than 120% of the nation’s gross domestic product.
asserted
debt → hit → product
Paying interest on that debt costs some 3.2% of GDP.
asserted
Paying → pay → GDP
That’s about $1tn, more than is spent on national defense.
asserted
That → ’ → defense
The Congressional Budget Office projects that debt and interest payments will continue to grow faster than the economy over the coming decades.
asserted
payments → project → decades
In October alone, the first month of the 2027 fiscal year, the fiscal deficit ballooned to $409bn.
asserted
deficit → balloon → 409bn
The Center on Budget and Policy Priorities estimates that restoring the subsidies to health insurance plans under Obamacare from 2030 to 2039 would cost $460bn.
asserted
restoring → estimate → 460bn
Undoing the budget cuts to the Snap food stamp program and Medicaid that Trump used to partly fund the tax cuts in his One Big Beautiful Bill Act (OBBA) would cost $2.2tn over that decade.
asserted
Trump → undo → decade
“Reversing the harms is going to be very expensive,” said CBPP’s senior director for Federal budget policy, Brendan Duke.
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director → reverse → policy
And that’s the easy part.
asserted
that → ’ → ?
The trust fund that pays for social security benefits is scheduled to run out of money in less than six years, when the new crop of Democratic senators are still in their first term.
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crop → pay → term
By law, that would lead to an automatic 22% cut in benefits.
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that → lead → benefits
Fixing that will require more money.
asserted
Fixing → fix → money
Artificial intelligence may further complicate the picture, burdening the safety net with potentially millions of workers displaced by the new technological revolution.
uncertain
intelligence → complicate → revolution
Historian Bruce Bartlett, who back in the day advised Ronald Reagan on budget policy, argues that this state of affairs is the outcome of a Republican strategy honed over the years since Gipper’s day: cut taxes to strangle the budget and tie the hands of whatever Democratic administration comes next.
asserted
administration → advise → hands
Trump’s OBBBA will add somewhere between $4.1tn and $5.5tn to the federal debt over 10 years, depending on whether temporary tax cuts in the bill are made permanent by a future Congress, something that has usually happened in the past.
asserted
that → add → past
This, Bartlett once told me, will “make sure the next Democratic president is a complete and total failure”.
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president → tell → me
The new taxes that would be needed just to fill the holes Trump and his Republican enablers bored into the budget, let alone patch up the safety net they gleefully eviscerated, seem beyond anything achieved in recent memory.
asserted
they → need → memory
Consider this: The last time that a government with any Republican in power delivered a tax increase was in the 1990s, when George HW Bush was president and Congress was blue.
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Congress → consider → 1990s
Bush paid for his sin, though, losing reelection to Democrat Bill Clinton.
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Bush → pay → Clinton
Democrats have raised money when they held the presidency and Congress.
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they → raise → presidency
But the trend suggests the opportunities are fading.
uncertain
opportunities → suggest → ?
Bill Clinton’s 1993 tax increases are estimated to yield the equivalent of $3.3tn over the 2030-2039 decade, adjusting for inflation.
asserted
increases → estimate → inflation
But the feat, which helped produce the nation’s first budget surplus since the 1960s, was ultimately spent on a tax cut by Clinton’s successor, George W. Bush.
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which → help → successor
The next shot at raising taxes was more modest.
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shot → raise → taxes
Barack Obama’s Affordable Care Act raised the equivalent of $1.1tn over 2030-2039, in inflation-adjusted dollars.
asserted
Act → raise → dollars
But Obama also made permanent some of George W Bush’s tax cuts.
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some → make → cuts
Joe Biden tried to go bigger: his original Build Back Better Act, passed in the House, would have raised the equivalent of $2.3tn over that window.
asserted
Act → try → window
But the Senate nixed that, authorizing only about $700bn in the Inflation Reduction Act.
asserted
Senate → nix → Act
How much more tax revenue does the US need?
asserted
US → need → revenue
It depends on what Democrats want to achieve.
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Democrats → depend → what
Total tax revenue in the US amounts to less than 26% of its gross domestic product.
asserted
revenue → amount → product
Perhaps matching other rich countries is an impossibly high bar.
asserted
matching → match → countries
…and 5 more, not listed.
The Aporia
