Debt and Delusion
How Washington's Shutdown Fiscal Theater Obscures a Monumental Debt Disaster
The Congress of the United States seems determined to approach another government shutdown; the repetitive nature of these crises would be comical if its pathetic frequency didn't lend it a semblance of tragedy. As often happens, the nation finds itself purportedly on the brink of disaster with the ominous specter of a “fiscal emergency” looming over Washington. Both the shutdown drama and the supposed bipartisan agreements presented at the 11th hour are nothing more than political theater—an elaborate distraction from the real, long-term fiscal irresponsibility that has plagued both parties for decades.
Politicians posture, throw accusations across the aisle, and pretend to champion fiscal discipline. Republicans oft sing a tune about how reckless amounts of spending by their Democratic opponents threaten the nation's finances, while Democrats similarly decry Republican “tax cuts for the rich” and allege that they focus on benefits for corporate donors and the wealthy at the expense of the deficit. In reality, both Democrats and Republicans are equally liable for this gross mismanagement.
No politician or party is willing to make the hard choices necessary to rein in spending as we hurtle toward fiscal collapse. Instead, our Soviet-style gerontocracy in Congress—aging politicians, most of whom were born before 1960—clings to power by prioritizing their interests—reelection. Cutting spending is rarely popular. As a result, they are content to kick the proverbial can down the road, leaving the next generation with an unprecedented mountain of debt.
Shutdowns are a charade. Politicians and Beltway pundits treat these moments as existential crises, but they allow both parties to avoid addressing the real drivers of our national debt. Shutdown discourse fixates on short-term battles over discretionary spending—which accounts for about a third of the federal budget—while ignoring the far more consequential issue of mandatory spending, which makes up the bulk of government expenditures.
Congress has until September 30 to avoid the latest shutdown, but the course of action they will take is predictable. Lawmakers will scramble for last-minute stopgap measures and temporary funding patches, declare themselves heroes for keeping the lights on, and the cycle will likely repeat. Meanwhile, the deficit will continue to balloon unchecked, expanding upon itself like a black hole.
The first, and perhaps most glaring, culprit is entitlements. Entitlement spending—Social Security, Medicare, and Medicaid accounted for 63% of total federal outlays in 2021, with the untouchable sacred cow that is Social Security costing $1.4 trillion alone. Due to the aging of the American population, the shrinking labor force participation rate, and rising healthcare costs, entitlements are projected to account for $4 trillion of outlays by 2033—eclipsing the tax revenue generated by the U.S. government.
One must conclude that the only path toward solvency is means testing. Many American seniors are quite wealthy and benefit from government stimulus and rising asset values, such as 401(k)s, homes, and stocks, while their fixed incomes, like Social Security, increase with inflation. This contrasts the financial struggles of younger Americans, who face high living costs and difficulty accumulating assets. Those seeking to conserve this status quo, oddly enough, the liberals in this equation, criticize those seeking entitlement reforms as amoral robber barons, yet where is the morality in subsidizing the life of the old rich off the backs of the younger working populace?
The common retort against means testing is often from those who stand to benefit, insisting that “they paid into it” and, therefore, are entitled to it irrespective of their financial situation. This argument is not compelling as there are several programs that affluent taxpayers pay into but do not typically benefit from, such as Unemployment Insurance, the Supplemental Nutrition Assistance Program, Pell Grants, and Federal Student Aid. Social Security was established to provide a safety net to prevent poor seniors, ensuring those in this limited circumstance would have a safety net to fall into, not serve as a Universal Basic Income for the elderly.
A report from the Manhattan Institute points out that these programs disproportionately benefit high-income seniors, many of whom are the wealthiest generation in U.S. history, with millions holding more than $1 million in investable assets. At the end of 2023, Americans over 70 held 30% of the country's wealth despite comprising roughly 11% of the population. Lack of means testing creates a moral hazard, as high-income Americans become disincentivized from managing their finances responsibly or saving for retirement. There is an erroneous notion that Social Security benefits always match contributions, yet the Manhatten Institute's study concluded that a high-earning couple would receive $836,000 in benefits for $812,000 in contributions. As the benefits for wealthy retirees increase, the deficits of the program continue to grow at an unsustainable level.
Means testing presents the perfect compromise between both ideologies. It satisfies fiscal conservatives by providing a significant and beneficial cut to spending, while avoiding the need for tax increases and their adverse effects on investment, job creation, productivity, and economic growth. Liberals should also support this approach as it is fiscally prudent without harming those who genuinely depend on these programs—the poor.
Yet, both parties balk at the idea. Republicans fear alienating the older voters they presently depend on for political survival, and Democrats are too beholden to the notion that Social Security is sacrosanct. The political stalemate is exacerbated by polarization—rather than work together, whichever party moves first to touch benefits would immediately be pounced on by the other. The result is a bipartisan failure that continues to bankrupt the country.
The most significant failure on this front comes from the Republicans. Conservatism is rooted in limited government, lessened and more efficient spending, and the encouragement of personal responsibility. Once the party of fiscal restraint, with House Speaker Newt Gingrich and his majority working with President Bill Clinton to balance the budget in 1998, the Republicans have since abandoned their commitment to cutting spending—let alone reforming entitlements.
Conservative think tanks, columnists in the National Review, and other hubs of right-wing intellectualism remain the last vestiges of entitlement reform as the political reality has become messier. The last serious attempt to address the program’s impending insolvency came in 2005 when President George W. Bush warned of the threat to Social Security’s solvency. Mr. Bush warned that for the program to remain alive for America's young, it needed to be dramatically reformed and suggested partially privatizing the program, allowing Americans to divert their Social Security tax into investments and creating individual accounts.
Democrats unanimously opposed these reforms, and Republican intra-party divisions and public discontent helped contribute to the 'blue wave' in the 2006 midterms. In these elections, Democrats regained control of both chambers of Congress, effectively killing the reform. The reality is that, despite its necessity, entitlement reform is incredibly unpopular—Social security is often described as a third rail of politics; one dares not touch it. The general public has difficulty visualizing the consequences of events decades away. It is more inclined to support politicians who flaunt a glistening smile and insist everything is fine and that no cuts are necessary.
This brings us to the modern Republican Party's capitulation on entitlements. In 2016, the populist insurgency led by Donald Trump remade American political coalitions, and the Republican party abandoned many of its conservative principles, particularly those regarding entitlements and spending. Unlike Mitt Romney, Paul Ryan, or George W. Bush, Mr. Trump rejected touching Social Security or Medicare. Instead, Mr. Trump repeatedly campaigned to “protect” these programs in 2016, 2020, and 2024, criticizing Nikki Haley, Ron DeSantis, and others for proposing reforms to the programs that would’ve done a far better job “protecting” them than inaction. Mr. Trump champions the status quo as it relates to entitlements because he knows these programs particularly resonate with his base, which is comprised of former Democrats (predisposed to be in favor of social welfare), older voters, and those in rural areas who are reliant on government assistance.
Mr. Trump and his populism offer vague optics-driven promises rather than robust policy, suggesting that it is possible to "have your cake and eat it too," where short-term and positive-sounding benefits are often championed and long-term or damaging consequences ignored. In this case, Mr. Trump, and almost every other politician, would rather keep the unsustainable trajectory of these programs in the long term than risk losing political capital.
Mr. Trump utterly failed when it came to government spending. Simply cutting taxes and proclaiming victory is inadequate. The 115th Congress, the last Republican Trifecta, was a prime example of the Republican party's fiscal policy failure. The Trump administration spent $3.8 trillion in its first two years, despite promises to reduce the size of government and a campaign pledge to cut the national debt—outpacing President Obama’s emergency spending during the Great Recession. This is not fiscal responsibility; it is fiscal insanity.
Beyond entitlements, the federal government is riddled with inefficiency and waste. Yet the problem isn't merely the size of the government—it's the sprawling inefficiency that infects its operations. The government should do fewer things but do them well. Today’s government does too much and, as a result, does it poorly.
Despite repeated calls for reduced government size, federal employment has surged in the last decade by 10%. The federal government now employs 2 million people, often in redundant tasks that could be consolidated or eliminated for efficiency and decreased costs. Beyond mere staffing, the federal government’s inefficiency is compounded by the overlapping missions of its various agencies, generating a bureaucratic labyrinth that hemorrhages taxpayer dollars.
Consider, for example, the Department of Energy and the Environmental Protection Agency, both responsible for administering renewable energy programs. A Government Accountability Office (GAO) report discovered 82 wind-related initiatives spread across nine agencies, including DOE and EPA, often duplicating financial support for the same projects—this fragmentation results in unnecessary financial excess. According to the GAO, eliminating this overlap could save the federal government up to $500 billion.
Both parties have failed to make the tough decisions necessary to bring America back to fiscal sanity. The real tragedy of government shutdowns is that they distract from the more profound crisis: a government addicted to spending, a political system unwilling to confront entitlement reform, and a future generation left to clean up the mess. If we are serious about solving the debt crisis, it’s time to cut the bloat by reforming entitlements and demanding efficiency from government agencies. The time for thumb-twirling and theatrics is over. We need leadership willing to make the hard choices—before it’s too late. Otherwise, we’re rearranging the Titanic deck chairs while Washington fiddles away.