What Do Moderates Want?

COMMENTARY Political Process

What Do Moderates Want?

Jan 13th, 2006 2 min read


When Congress reconvenes this month, lawmakers likely will try to resolve their bitter standoff over the budget. Which raises an interesting question: What do the self-styled moderates on both sides of the aisle actually want?

They have made it clear what they don't want: No serious reductions in federal anti-poverty programs. No unbalanced budgets. No significant changes in Medicare. No interference with Congress' power to bring taxpayer-funded pork projects back to their states. No drilling in ANWR, even if a tighter supply of oil pushes home heating prices skyward. No limits on the federal government's commitment to pay for nursing home care, even if it means requiring low-wage workers to underwrite care for seniors who have up to $750,000 in home equity.

Many, and maybe most, Americans would agree. They are, indeed, moderate. But they need to ask moderate lawmakers: How big will government be if they continue to say "no" to every spending cut, and how much of a tax burden should our children be forced to shoulder?

This is a serious question. Here's why. The government's bean counters at the Congressional Budget Office (CBO) have projected the direction of spending and taxes over the next 50 years. Other agencies have done the same, and they pretty much agree on the figures.

So let's look at the picture 25 years from now, when a newborn has left college and is working and paying taxes.

The CBO notes that with baby boomers retiring in large numbers in less than a decade, and health costs pushing up spending for Medicaid and Medicare, the "Big Three" entitlements of Social Security, Medicaid and Medicare will cost far more. In fact, the proportion of our total national earnings (GDP) each year that the Big Three will spend will almost double, from 8 percent today to over 14 percent in 2030.

Now let's add the rest of government. And let's assume that other programs just grow with inflation and no new programs are enacted over the next quarter century (CBO's optimistic assumption). If so, then total spending rises from 19 percent of all we earn today to about 25 percent when that newborn turns 25. And it rises to 33 percent when he or she reaches 45.

Right now, federal taxes take about 17 percent of GDP, roughly what they have done on average for decades. The CBO shows, in fact, that the recent tax "cuts" just slowed the total growth of taxes; they didn't reduce the total burden as a percentage of GDP. Oh, and don't forget state and local taxes, which add about another 10 percent to the average taxes a family pays.

So if the moderates don't want to make serious spending cuts and curb the growth of the Big Three -- and they don't want to cut other programs such as education, highways or defense -- they are essentially telling the newborn that his or her taxes will rise from about 17 percent today to 25 percent when he or she is 25 -- and to 33 percent (almost twice today's taxes) when he or she is 45. That would mean income tax rates doubling. Or a national sales tax of over 20 percent on everything you buy. Or payroll taxes more than doubling for employers and employees. In short, it would mean taxes like those in Germany and France, along with the slow growth and high unemployment those countries are suffering.

That probably isn't the message that moderates want to send. But when you add up everything they oppose, that's the message you're left with. And if it's the moderate position, fine. They just need to make that clear to the folks back home.


Stuart M. Butler, Ph.D., is Vice President for Domestic and Economic Policy Studies at The Heritage Foundation.

First appeared in Knight-Ridder Tribune