My fellow Americans,
I am happy to report that our administration’s big, really huge tax cut is already boosting economic growth and increasing your paychecks. And we are also growing by regulating less domestically than any administration in history — well at least since FDR, if you insist on being technical. Anyway, we have set the ground for a lot of winning. If Hillary had been elected, we would be losing, bigly.
But we still have a problem of government spending. It continues to go up and up. And it is driven by increases in entitlements, like Social Security and Medicare. Essentially all the growth in government spending over the rate of economic growth in the last four decades comes from new spending on various entitlements. If it keeps up, it will soon take up more than half the government budget and that government budget will also be a much bigger part of the economy.
That’s dangerous for our nation. A big government budget on entitlement autopilot will harm economic growth. Look at Old Europe. It will also make it hard to raise money to counter new global threats. I mean from evil-doing countries, like Iran, North Korea and China, although no one has a better personal relationship with President Xi than I do.
Therefore today I am announcing that I will forgo any payments from social security and introduce legislation prescribing that those earning over a million dollars a year will get only a token payout from the program. We are such winners we don’t need these payments. And we will pay the full cost of our Medicare benefits as well. And this legislation will adjust this number down over time so that other earners above 10 percent of the median income won’t be getting much from the program once they have more time to prepare. It won’t be difficult to do so in an economy with so much winning.
Now some people will argue that means-testing Social Security will make it a welfare program — transferring money from the rich to the poor. But it already does so through its structure of benefits and taxes and already wealthy Medicare earners pay more for the benefits. And if entitlement growth continues at the current rate, we will have to raise taxes substantially on everyone. And that is more costly to the economy than reducing benefits on the well-off because more taxes harm incentives of the winners to work.
In return for making our entitlement system even more progressive, we have only two demands from the Democratic Party. First, they should agree to a change in the inflation index for everyone on Social Security. Currently that index overstates inflation big time. One important reason is that as prices of one product go up, consumers can choose another product with little loss in utility. For instance, if Brooks Brothers shirts go up in price, you can buy Trump shirts! Chain CPI takes account of the power of consumer choice to constrain the effects of inflation on the pocketbook.
And even with chain CPI, inflation is overstated. Think of all the free goods that our society is creating that need to be considered in calculating the direction of the cost of living. Facebook is one of them for instance. Now of course the Russians who posted there did not have any effect on the election. Only the failing New York Times thinks otherwise!
My other demand is that Medicare be slowly changed to a system where the government pays for private insurance, creating more competition among providers. I won’t go into all the details here. That’s why I have great people, like Alex Azar, to serve me. I just set the broad outlines. Read my book The Art of the Deal and you will see how it is done. Grand bargains between the parties were a thing of the past before a real New York deal maker came to town.
In closing, my fellow Americans, let me stress that that the time to make changes in entitlements is when most people feeling they are winning, because the then they do not mind giving things up as much. And reforming our entitlement system will allow us to win even more in the future.