Does Public Support for Entitlements Make Tax Hikes Inevitable?

Citing Congressional Budget Office director Doug Elmendorf's warning that American cannot repeat its budgeting history because "the aging of our population and the rising cost of health care have changed the backdrop for federal budget policy in a fundamental way," David Leonhardt of The New York Times declares that at some point, taxes will have to go up. And if they don't? "For taxes to remain where they are," he writes, "Washington would need to end Medicare as we know it, end Social Security as we know it, severely shrink the military — or do some combination of the above." That probably sounds pretty good to folks around these parts, but it won't happen, Leonhardt says, because "national polls show huge majorities favor keeping Medicare and Social Security in something approaching their current form."

Leonhardt is correct about this. But it's also true that few people know how much America spends on Medicare, or how much of the budget — and the long-term debt problem — is tied up in health programs and Social Security, a fact that may color their preferences. And even still, raising taxes alone doesn't actually solve the problem of mandatory health spending. Leonhardt notes that there is broad public support for raising taxes on high earners. But while a tax hike on those with high incomes might make an entitlement reform deal more politically palatable, it won't keep up with the projected growth in Medicare spending, which means there's no easy, poll-tested way to deal with the long-term debt. Somehow, some way, Medicare and Medicaid, at least, will have to be transform from thier current incarnations into fiscally sustainable programs. In the long run, it may be that taxes are part of a deal to make that happen. But by itself, simply raising taxes on the wealthy won't fix the problem.  

Now, as Leonhardt also suggests, it may be that a long-term debt deal comes packaged with new revenue raised by closing off the myriad targeted tax breaks that distort the system; coupled with a substantial entitlement overhaul, that could be quite appealing. But a deal of that sort might be even less popular amongst the general public. "Closing loopholes has much stronger support among economists and columnists than it does among voters," Leonhardt writes. But then, it's hardly news that public preference makes dealing with the federal debt exceedingly difficult. If there were an easy solution that majorities agreed upon, it probably would have passed by now. In the end, though, the long-term debt will have to be dealt with, even if there's no combo of choices from the deficit reduction menu that a majority of the public actually supports.