What defines this campaign, in part, is a yawning gap between the political rhetoric and the country’s budget problems. And it’s not just President Barack Obama. Mitt Romney is also playing. The consequences are that the victor will either sidestep those problems or, by attacking them forcefully, shock an unprepared public. Perhaps the first presidential debate, on Wednesday, will unmask and discredit the consensus against candor, though this seems doubtful.
It is said of war that truth is the first casualty; that also applies to this campaign. Let’s imagine what Obama would have to say to merit his claim of ruthless truth-telling.
“Fellow Americans. For years, your leaders — including me — have misled you. Your government has made more promises than it can keep, even if the economy returns to full employment. Your taxes are going up, and your public services are going down.
“As you know, the great driver here is the retirement of baby boomers. Between 2011 and 2025, the number of retirees on Social Security will grow by nearly 50 percent to 66 million people; Medicare experiences a similar rise. The resulting spending surge perpetuates huge budget deficits. The Congressional Budget Office estimates that present policies would result in cumulative deficits of $10 trillion from 2013 to 2022. In 2022, the annual deficit is $1.4 trillion, or 5.5 percent of the economy, our gross domestic product. I have no credible plan to control Medicare and Social Security spending.
“I have also misled by implying that making millionaires and billionaires pay their fair share will solve much of the problem. It won’t. My proposals would increase today’s 33 percent and 35 percent top tax rates to 36 percent and 39.6 percent for couples with incomes exceeding $250,000. The nonpartisan Tax Policy Center estimates this would raise $440 billion over a decade. Remember that projected deficits total $10 trillion. I have also supported higher rates than today’s 15 percent on dividends and capital gains. These changes would raise $236 billion over the decade, says the Tax Policy Center.
“Can’t we just tax the rich even more? Unfortunately, this won’t work either. Third Way — a liberal group, mind you — estimated the effects of top income tax rates of 49.6 percent and 41 percent and a top capital gains rate of 38.8 percent. The budget still doesn’t balance; by 2040, the deficit is $3.3 trillion in today’s dollars. Third Way concludes that if Social Security and Medicare ‘are left on autopilot, burdensome middle-class tax hikes’ — about 60 percent — ‘become inevitable.’
“I reluctantly agree. We must reduce benefits for healthier and wealthier retirees to minimize deficits, other program cuts and tax increases. Here’s what I propose ... .”
Romney also participates in the charade. Suppose he wins. Here’s what a President Romney might say on truth serum.
“Fellow Americans. The budget outlook is worse than I’ve acknowledged. In the campaign, I pledged to reduce federal spending to 20 percent of GDP. This won’t happen: The required cuts for important programs — the FBI, highways, the Centers for Disease Control and Prevention, the Border Patrol and others — would be too great.
“For the past 40 years, federal spending has averaged 21 percent of GDP, so my goal of 20 percent seems reasonable. And we should eliminate low-priority programs, such as Amtrak. But savings will be more than offset by an aging population and health costs. From 1972 to 2011, Social Security and major federal health programs averaged 7 percent of GDP; in 2020, they’re estimated at 12 percent of GDP. Unless we control these programs, they will strangle the rest of government.
“As for any tax cut, forget it. Of course, we should try to simplify the system and spur economic growth by cutting top rates and ending tax breaks. Even this will be hard, because many breaks — such as the mortgage interest deduction — are popular. But to balance the budget, we’ll still need to raise more, not less, tax revenue from the income tax or other taxes. Since 1972, tax revenue has averaged only 18 percent of GDP. I should have been more candid with you during the campaign.”
The chasm between stump rhetoric and governing realities will haunt whoever wins. It also defines a dilemma of democracy. People want their leaders to tell the truth, but they often don’t want to hear the truth. Genuine leaders escape this trap by persuading public opinion to acknowledge distasteful problems. But these leaders are rare. Most pursue immediate popularity over truth even if this deepens long-term public mistrust.
Robert Samuelson writes a weekly economics column for The Washington Post.