Columnist Sid Salter 8/5/2014

Published 12:00 am Tuesday, August 5, 2014

Salter: Political rhetoric about fed spending dodges main issues

As it did during the Mississippi Republican U.S. Senate primary and likely will again to some degree in the November general election, the talk turns to cutting federal spending…sorta.

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The rub is that most politicians, special interest groups and the media all talk about it but only in the abstract. In Mississippi, the conversation is complicated even more by the state’s historic poverty and the massive role that federal spending plays in the state’s economy. How large? About 46 percent of all Mississippi revenues come from federal spending.

One in five Mississippi lives below the federal poverty level in a state with the lowest per capita income in the nation and the highest rate of utilization of food stamps.

What no one really talks about is the fact that significant reductions in federal spending – not just in Mississippi but across the nation – can’t come without congressional action on the future of Medicare and Social Security. Mississippi has over a half-million Medicare recipients and some 632,000 Social Security recipients.

The Heritage Foundation reports that “45 percent, or almost half of all spending, went toward paying for Social Security and health care entitlements (primarily Medicare and Medicaid). In 2002, that was only 25 percent. Without reform of these massive and growing programs, Washington will have to borrow increasing amounts of money, piling debt onto younger generations and putting the nation on a dangerous economic course. Social Security is the largest federal spending program and has held this position since surpassing defense in 1993.”

That cheery bit of news is compounded by Congressional Budget Office estimates that the federal government spent $3.602 trillion in Fiscal Year 2014 and collected $3.042 trillion in revenues, which left a projected federal budget deficit of some $600 billion. The deficit looms in a country with a national debt hovering just under $17 trillion that already requires an increase of the current federal debt limit of $16.7 trillion.

In their annual report, Medicare’s trustees estimated that the Medicare trust fund that provides hospital care to the nation’s retirees — called Medicare “Part A” — will run out of money by 2030. In their annual report, Social Security trustees reported that the program is fully solvent until 2033, but faces a moderate long-term shortfall.

With that as preface, cutting federal spending has an impact – a human impact – in Mississippi.

Federal funds in Mississippi pay for Medicare, Social Security, Medicaid, education, social welfare, and highways. Federal funding pays the lion’s share of government costs for Mississippi’s $7.5 billion agricultural and forestry production in 2012, which provided 29 percent of all Mississippi jobs and 22 percent of the state’s total income.

For public health care, the role of federal spending is most impactful. Three-fourths or more of Medicaid costs in Mississippi are paid by federal tax dollars. And to give a complete perspective, Mississippi puts two-thirds less into the federal coffers than it takes out as a state. Mississippi receives about $3 back in federal spending for every dollar in federal taxes paid.

So that brings us back to politicians talking to us about cutting federal spending. If there was a single issue that decided the outcome of the Republican Senate primary in Mississippi, it was certainly no race. It was federal spending.

In the general election scenario, it will be interesting to see how that issue plays between two nominees who have been part of Congress and know the facts on what federal spending cuts actually mean for Mississippi as part of an effort to get the nation’s fiscal house in order.

Bottom line, it can’t be done without reforming the Medicare and Social Security programs – one of the hardest political “sells” on the planet.

(Sid Salter is a syndicated columnist. Contact him at