In the Press: DOGE's Impact, Minnesota Fraud, Social Security Misunderstood & Coming Due, Trillion-Dollar Interest Payments
A Smaller Federal Workforce, But Not a Smaller Government
While the Trump administration has overseen historic reductions in federal staffing, overall spending continues to climb. Boccia explains why in a New York Times article by Eileen Sullivan:
Spending continues to outpace economic growth, said Romina Boccia, the director of budget and entitlement policy at the libertarian Cato Institute. Most federal funds, she noted, go to Medicare and Social Security, two programs that neither political party has the will to substantially change. That’s also the case for another big-ticket item: paying interest on the debt.
“A lot of the spending reductions that I’ve observed coming from the administration have been less focused on cutting big budget items and more on reorienting government funding based on ideological or different cultural priorities,” Ms. Boccia said.
What Minnesota’s Fraud Cases Reveal About Federal Welfare Funding and Oversight
Federal investigations of Medicaid fraud in Minnesota are drawing national attention. As Chris Edwards notes in an interview with The National News Desk‘s Cory Smith, the scale of the fraud underscores how weak controls based on misaligned incentives can turn well-intentioned programs into magnets for abuse:
Federal aid programs run by states are vulnerable to fraud, because state administrators don’t have a strong incentive to be frugal with the taxpayer money, Edwards said.
“It’s federal money. It’s free. The money is free to the states,” he said.
The automated nature of the claims process and the massive size of federal programs also contribute to the fraud risk, Edwards said.
“There’s too many government programs, and the fact that the feds are providing so much of the funding, it’s just a recipe for this sort of trouble, combined with the fact that with computers now, the programs can be looted very quickly and rapidly, and it takes auditors years to sort of catch up,” he said.
Turning Medicaid into a block grant, giving states a fixed amount of money, might help, Edwards said.
But the best solution would be to leave it to states to fund the welfare programs, he said.
States, which must balance their budgets, would keep better track of their own dollars, he said.
“And so, the state policymaker, whether Republican or Democrat, knows that if spending is going up rapidly on some program, they’ve got to ... trim other programs,” Edwards said. “So, there’s just a natural incentive for them to be more frugal with locally raised money.”
Social Security: Popular, Misunderstood, and in Need of a Revamp
Social Security remains one of the federal government’s most popular programs, yet widespread misunderstanding about how it works is complicating efforts to reform it, as automatic benefit cuts loom. Emily Ekins gives an overview of Cato’s polling results in an article in USA Today by Medora Lee:
Without better understanding of what Social Security is, “the public cannot understand why Social Security is not a retirement savings program and why the system has such a significant shortfall,” she said. “This lack of understanding makes it more difficult for policymakers and reformers to build public support for necessary changes.”
Absent broader education on Social Security, Ekins said Congress should consider creating an independent nonpartisan commission authorized to study and enact reforms. Most Americans (71%) would support this option, Cato’s survey showed.
The commission would be similar to the Base Realignment and Closure Commission in the 1990s that Congress tasked with recommending how to close and consolidate military bases, Ekins said.
Delegating the job to an independent commission would also provide cover for politicians. If they “delegate and let the commission make tough decisions, they can say ‘don’t blame me! I would have voted against it,’” Ekins said.
Social Security’s Deadline Is Now on the Senate’s Clock
As Wall Street Journal reporter Richard Rubin writes, senators elected this fall will inherit the unenviable task of addressing Social Security’s borrowing deadline. With the ‘trust fund’ projected to fall short by 2032, tough choices loom. Rubin cites Boccia:
Lawmakers could also increase the basic retirement age. The 1983 changes pushed that to 67 from 65. Romina Boccia, director of budget and entitlement policy at the libertarian Cato Institute, said she would keep that going up to 70, then link the retirement age to longevity.
The Rising Cost of Carrying America’s Debt
In a Quartz Washington newsletter, Joseph Zeballos-Roig lays out that trillion-dollar interest payments are no longer a distant milestone but a new normal. As borrowing costs climb, the consequences of persistent deficits are becoming more immediate.
But it’s worth taking stock of the trade-offs that are likelier to occur given the swelling U.S. debt. Romina Boccia of the libertarian-leaning Cato Institute raised this in a House Budget Committee hearing last month. “Excessive peace-time deficits and debt also undermine America’s ability to borrow when it matters most, in times of crisis,” she said.