Ken Paxton is right. Tax cuts will mean Social Security and Medicare cuts.

By Brett Arends

It doesn't matter if you are a Republican or Democrat: Math is math

Ken Paxton shakes hands with President Donald Trump, who has been campaigning for him in Texas

Don't blame Ken Paxton for saying privately he is ready to cut "mandatory spending," which means Social Security and Medicare.

The Republican candidate for the U.S. Senate in Texas was recorded saying "we have to suck it up" and make cuts - "reasonable cuts" - to mandatory spending, according to the Texas Tribune on Thursday.

Paxton is only saying what most Republican politicians believe, although they are usually careful not to say it publicly (or maybe even privately). They will need to cut Social Security and Medicare to pay for their tax cuts.

I am not saying that because I am out to get the Republicans. I am saying it because I can do math. You can have tax cuts, or you can have the Social Security and Medicare spending you expected. You cannot have both. The money isn't there.

All this talk about waste, fraud and abuse, about some mythical trillion-dollar pot of gold at the end of the DOGE rainbow that will pay for everything, is just baloney.

The sad thing about this is that the people who most need to hear this will dismiss it as "fake news." Apparently even math is fake news if you don't like the numbers. I was recently reading a company earnings-call transcript, and the CEO was talking as if the federal government consisted entirely of bureaucrats who were all fly-fishing in Idaho when they were supposed to be working. The myth dies hard, and in the internet age, when everyone can find their own echo chamber, it can go on for a long time.

So give Paxton some credit for admitting, at least in private, that the budget math doesn't add up.

I went through this learning experience way back when I was a libertarian youngster and I read "The Triumph of Politics" by President Ronald Reagan's libertarian budget director, David Stockman.

He described his attempts to cut the federal budget to match the early Reagan tax cuts. He couldn't do it. Reagan believed in the "waste, fraud and abuse" pot of gold, and Stockman details over several hundred pages his repeated attempts to convince the president that to cut federal spending by any meaningful amount you needed to gut actual programs.

Sure you can find inefficiencies. You can always find inefficiencies.

Long before Elon Musk decided he was the first person ever to look for inefficiencies in the U.S. government, an actual department, the Government Accountability Office, was already doing that. It's been around for a hundred years. There are also 17 independent inspectors general, each with their own staff, finding inefficiencies in individual departments.

But the gains from these things are mostly marginal. Ten million dollars here, a billion dollars there. It doesn't just sound like a lot of money, it is a lot of money. But it won't affect the deficit, which is about $2.1 trillion.

Ironically, Musk actually missed one of the biggest areas of waste, fraud and abuse in the entire system. Tax cheats cost the rest of us more than $300 billion a year, according to a new report from the GAO. That's actual fraud, not inadvertent underpayment, the GAO says. Someone not paying $10,000 in taxes they are supposed to is the same as someone taking $10,000 in federal spending that they are not supposed to. The result is the same.

The IRS actually reckons the total tax gap is more than $600 billion.

You'd think the people saying they wanted to crack down on waste, fraud and abuse would go after this, right? But instead of increasing spending on tax compliance, the GOP has cut the number of people working for the IRS and audits have declined.

Bruce Bartlett, who worked in the Reagan administration, has pointed out that Republican tax-cutting hero Ronald Reagan actually raised taxes, bigly, several times. (See here and here.) Reagan's initial 1981 tax cut created such huge deficits that he was forced, effectively, to reverse it substantially.

Democratic President Bill Clinton actually balanced the budget, partly by cutting federal waste (the numbers fell in absolute terms during the 1990s, and plunged as a share of total employment) but also by raising taxes.

Then George W. Bush got elected president and slashed taxes. The black ink turned to red again. Trump and the GOP cut taxes again, in 2017 and 2025. Deficits are now running at an insane 6% of gross domestic product, during a time of economic growth and reasonably full employment. Heaven help us if there is a crisis and the government wants to add to the deficit to support the economy, as it did during the global financial crisis and again during COVID.

Net debt, which was just 33% of gross domestic product when Clinton left office in 2001, is now 99% of GDP and rising.

No wonder the bond markets are getting worried.

It doesn't matter if you are a conservative or "progressive," Republican or Democrat. Math is math. As I pointed out here even before the 2024 election, the claims that you can cut taxes and not cut Social Security and Medicare don't add up. Not even close. Not even in the same ballpark.

Social Security spending is equal to 5.3% of gross domestic product, according to the Congressional Budget Office. Medicare is another 4.1%. Defense is 2.7% (actually more, because this estimate was made before the U.S. government launched its war against Iran, but let's use it as a baseline figure). Interest on the national debt is 3.3%. (Again, it will turn out to be more because interest rates are now higher than forecast)

Check out table 3.1 here if you don't believe me, and look at "fiscal year 2027," which started on Oct. 1.

Spending on veterans is another 1% of GDP. The CBO document, annoyingly, doesn't break it out separately. For that you need to check table 3.2 in the CBO's "10-Year Budget Projections" spreadsheet, available here. The total for 2027 comes to $324 billion, or about 1% of the $33 trillion GDP.

My calculator says those five items alone add up to 16.4% of GDP. Deduct "offsetting receipts," such as Medicare premiums, equal to 1.2% of GDP, and the net figure for federal spending on these five programs comes to 15.2% of GDP.

Total federal taxes: 17.7% of GDP.

So those five programs alone soak up 86 cents out of every dollar we pay in taxes.

And these spending numbers are underestimates, because of rising interest rates and the costs of the Iran war.

Notice we haven't even counted Medicaid, or any of the other things the federal government does, from highways and farm support to homeland security, justice and so on. Remember that Medicaid's budget pays for most of the nursing-home costs of America's seniors, including those from the middle class. Remember, too, that Trump and the GOP want to increase spending on defense, dramatically.

How do all these figures add up? They don't - as Paxton admits.

If you insist on the tax cuts, grow up and admit to the cuts you will need to make to Social Security, Medicare and other programs. If you deny that you are going to cut those programs, grow up and admit that you will need to raise taxes.

-Brett Arends

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10-08-26 1408ET