KASICH COVERAGE
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POLITICAL COVERAGE
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Gov. John Kasich loves to talk about those heady U.S. House days when he “spent 10 years of my life fighting to balance the federal budget.” He even jokes that one of his budget plans was so unpopular “some of my Democratic pals” voted for it because they did not “want me to be embarrassed.”
A booming economy helped, but Kasich can legitimately claim a hand in the bipartisan compromise that helped end 30 years of annual budget deficits and usher in surpluses from 1998 through 2001.
Now, as he runs for president nearly two decades later, Kasich is vowing to set the government on a track to end its annual deficits while simultaneously pushing Congress to adopt a constitutional amendment to balance the federal budget.
But this time Kasich’s budget-balancing promises may collide with some of his other promises.
On the campaign trail Kasich has vowed to balance the budget while increasing defense spending and overhauling the federal income tax code in a way likely to reduce tax rates for most Americans and companies. But even those who praise his commitment to balancing the budget note that he has been extremely vague on exactly how he will do it while fulfilling his other promises.
“Kasich was part of one of the most important budget deals ever,” said Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget in Washington. “That said, he hasn’t gotten to the specifics yet. And if you look at what he’s talking about, it would add to the deficit.”
“He gets an ‘A’ for emphasis, an ‘A’ for proven leadership on the issue and an Incomplete on how he would do it,” she said.
According to a report released last month by the non-partisan Congressional Budget Office, during the next decade the federal government will add $7 trillion to the publicly held debt, which is money the government owes to investors who buy treasury notes and securities.
The same report projects that the federal deficit in 2025 will exceed $1 trillion. Even if Congress eliminated every dollar in federal spending that year for education, housing, criminal justice, the environment and new roads, the government would still run a deficit.
“The trajectory and path is unsustainable because the $1 trillion is not the stopping point,” said Gary Hufbauer, a senior fellow at the Peterson Institute in Washington, which advocates reducing the deficit. “It just keeps going.”
Although politicians like to say they will crack down on wasteful spending, the deficit is spiraling out of control because of federal spending on the popular health and pension entitlement programs of Social Security, Medicare, and Medicaid.
Spending on Medicare, which pays for health coverage to the elderly, will double in the next decade while Medicaid, which provides health care to low-income people and long-term nursing home care, will climb from $301 billion in 2014 to $571 billion in 2025, according to the budget office.
Like Social Security, Medicare and Medicaid grow automatically every year depending on health care costs and the number of people enrolled. As baby boomers continue to retire by the millions, Social Security, Medicare, and Medicaid will consume more than half the 2025 federal budget.
“The biggest things are demographics and the cost of health care,” said Robert Bixby, executive director of the Concord Coalition, a non-partisan Washington organization that champions reducing the debt. “The steadily growing costs of those health programs will make it very difficult to balance the budget — even with a sound economy — any time soon.”
To bring the deficit under control, the next president will either have to push for draconian reductions in the growth rate of Social Security, Medicare and Medicaid, back a substantial tax increase on all classes of Americans or accept a blend of tax increases and spending reductions.
“There aren’t enough spending cuts to make if you are not willing to do anything on the revenue side,” said Harry Stein, director of fiscal policy at the left-leaning Center for American Progress Action Fund in Washington.
Kasich acknowledges entitlement spending must be restrained but so far has spoken only in generalities. In an interview Thursday with radio talk show host Hugh Hewitt, Kasich said he has “dealt with entitlements,” but warned “you will not get it done unless you can have some degree of bipartisanship.”
When asked in South Carolina last month how he would balance the budget and pay for his naval build-up, Kasich replied, “It’s all about priorities. You modernize. You improve. Some things you get rid of.”
Douglas Holtz-Eakin, former CBO director and economic adviser in 2008 to Republican presidential nominee John McCain, said if Kasich “is talking about reforming those programs, good for him because that is the inevitable reality that any president and Congress will face the next decade.”
But Stein said “when you look at the parameters Kasich has laid out,” the only way to balance the budget without new taxes “is through cuts in programs that low and moderate-income people rely on. That’s the fundamental problem with the commitments he has made.”
Kasich and New Jersey Gov. Christie are the Republican presidential candidates who have devoted the most attention to entitlements, with Christie proposing to gradually raise the Social Security retirement age from 67 to 69 and reduce Social Security benefits to wealthier retirees.
Although Democrats typically oppose restraining the growth in entitlements and Republicans reject new taxes, some budget analysts believe that the looming debt crisis will force the hand of the next president, be it a Republican or a Democrat.
“Realistically we have already hurt ourselves by kicking the can for so long,” said MacGuineas. “Our standard of living would be higher if we hadn’t put it off for so long. We’re either going to have real political leadership to bring change, or a crisis that will force change, or we will continue to muddle along.”
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