Magazine article Reason

'It's the Spending Growth That Really Crushes You'

Magazine article Reason

'It's the Spending Growth That Really Crushes You'

Article excerpt

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For six years Keith Hennessey worked in the West Wing as a senior economic adviser to President George W. Bush, eventually serving as director of the National Economic Council. Now, as a research fellow at the Hoover Institution, he's brought his briefings to the rest of us, explaining in exquisitely detailed daily memos at KeithHennessey.com just how domestic politics and policy work--and don't work-in Washington. Associate Editor Peter Suderman spoke with Hennessey by phone in March.

Q: How big a problem is the federal deficit right now? What are we in for in the long run?

A: We have a significant medium- and long-term deficit problem. And that problem is driven by spending. Every dollar that's spent by the government has to be financed by either taxing someone today or borrowing that dollar today and taxing them tomorrow. So both the level of taxation and the level of deficits are an outgrowth of how much the government decides to spend.

Q: Do you think the Obama administration has been basically straightforward about its budgeting and the consequences of its budgeting decisions?

A: Our budget challenge gets worse every year that we don't address the growth of entitlement spending. My concerns are that, one, the changes that the Obama administration is proposing are not significant enough and, two, in some ways the administration is proposing changes that make the problem worse. The result is that if the president's policies were all enacted as he's proposed them, we're looking at an ever-increasing level of debt and an ever-increasing level of taxation.

Q: So what should we be doing?

A: We need to address two underlying social factors. One is demographics. People are getting older, and old people are living longer. If we don't adjust the programs that provide benefits to senior citizens--Social Security, Medicare, and Medicaid--then we're going to be paying benefits for more years per person. …

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