As Trump speeches go, his address to the Detroit Economic Club was a good one. Donald Trump cleared the low bar of actually staying focused on what is mostly a pro-growth economic policy. But for a speech on economics, it was also remarkable for what it didn't say. There was absolutely nothing about America's most pressing fiscal issue: runaway spending on Medicare and Social Security. And even if Trump had mentioned the issue of entitlements in his economic speech, chances are he would have—as he has elsewhere on the campaign trail—ruled out changes to the programs.
Anyone who would cut federal spending has to face the daunting fact that more than two-thirds of the federal budget is spent automatically on Medicare, Social Security, and other entitlement programs, such as Medicaid and unemployment insurance. Some 17 percent of the budget goes to defense, while interest on the federal debt eats up another 6.5 percent. The little that is left for discretionary spending—the 6.5 percent of the budget Congress uses to pay for disaster relief, research, education, and less salutary items such as pork—could easily be crowded out. Economist Milton Ezrati warned in City Journal last year that, in the likely event the interest-rate on federal debt doubles, interest payments would eat up all non-defense discretionary spending. Even the liberal think tank the Urban Institute says that, absent reforms, mandatory spending on entitlements will swallow 98.3 percent of the budget a decade from now, leaving just 1.7 percent for all discretionary spending—and that 1.7 percent includes defense.
Trump succeeded in capturing the nomination in no small part because he took on immigration as an existential issue for America. But entitlement reform is just as pressing, if not more so. In 2008, there were 3.2 people in the workforce paying into entitlement programs for every retiree collecting benefits. That figure will drop to 2.2 in the next couple of decades, even with America's population swelling as a result of largely unchecked immigration. Unless these programs are restructured drastically, there's no amount of Trumpian economic growth that will be able to preserve them.
Entitlement reform was a centerpiece of the Republican ticket four years ago. Does that mean it's a losing issue? Before he got the vice presidential nomination, Paul Ryan had been the biggest leader on entitlement reform in Congress. Many expected his association with the issue would prove damaging. Yet, near the end of a punishing and dishonest campaign, in which -Republicans were slandered as the party that would pull the plug on grandma, polls showed Romney-Ryan essentially tied with Obama on whom voters trusted more to preserve Medicare.
Four years later we know this much for sure: The Democrats are glib and unserious about saving the social safety net. Social Security's long-term funding shortfall has grown from $5.3 trillion to $10.7 trillion on Obama's watch. Obamacare siphoned $716 billion from Medicare, and Medicare premiums are poised (again) to rise precipitously. And now, facing a funding debacle, Democratic nominee Hillary Clinton wants to increase Social Security benefits and expand government-funded health care.
A serious Republican candidate could gain credibility—and votes—by pointing out that Democratic entitlement plans are complete jabberwocky. Alas, Donald Trump also resides in a budgetary Wonderland. And what for? Trump appears to have gained nothing by making false promises to voters about entitlements. He's on a path to lose by a much larger margin than Romney and Ryan and against a far less popular Democrat. Speaker Ryan may have reluctantly endorsed Trump, but perhaps he should speak up before Trump completely undercuts the years' worth of work he and other Republicans have done educating the public about the need for entitlement reform.