Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I am pleased to welcome back to the show Mike Murphy,
who is senior vice president and chief of Staff at
the Committee for a Responsible Federal Budget. And we're going
to do just a few minutes of federal budget nerdiness
because partly because he and I are both nerds like that,
and also because these are things that really are going
(00:21):
to affect your life and potentially pretty soon. So Mike Murphy, first,
welcome back. It's good to have you here.
Speaker 2 (00:29):
Thanks for Roz's good to be with you again.
Speaker 1 (00:31):
So I want to cover two main topics with you, first,
the Big Beautiful Bill and then Social Security. So let's
start with the Big Beautiful Bill, and I would just
like you to give us some high level bullet points
to start on how states generally, and to the extent
that you have this information, Colorado specifically should expect the
state budget to be impacted by the Big Beautiful Bill
(00:53):
going forward, beyond the stuff that the state legislature just
had to deal with, I see the Medicaid stuff.
Speaker 2 (01:01):
Sure. So the Big Beautiful Bill Act in the past
over the summer in Congress had lots of different provisions
at a top line level, you know, at the national level.
We estimate that it's going to add to our death
and are told from the cost perspective. But the way
it has trickled down to the states mainly is that
they try to offset some of the costs. Within the bill,
(01:21):
they had a lot of provisions that required saving in
different programs, and many of which are joint federal state
or state of ministry programs you just mentioned, like Medicaid
or SNAP programs, et cetera. And so they're significant savings
that are then going to have to trickle down into
state budgets. So they're going to have to figure out
this year and the next and the coming years. But
that's a leading indicator ross because more of that is
(01:43):
to come. The idea here is bad news flows downhill.
We are in trillions and trillions of debt over thirty
seven trillion, highest levels of days of percent of our
economy passages World War two, and it's going up. More
of this is coming in the future, and that's why
states like Colorado are going to have to get ahead
of this. I don't know specific implications were us in
(02:03):
terms of the other Cater Snapp provisions for Colorado, but
all states, including Colorado are gonna have to grapple with this.
Speaker 1 (02:09):
So there's a lot of interesting aspects of this, and
you know, I want to focus on this more as
a matter of economics than politics, but just maybe a
hint of politics and what I'm what I'm gonna say here. So,
the Big Beautiful Bill does increase the deficit in the debt,
although I think it's a little bit mendacious of some
(02:31):
folks on the left and I'm not putting you in
that category who who talk about the bill raising the
deficit and debt by like four trillion dollars or something
in that What they include in that number is an assumption,
which I realized is based on the prior law, that
(02:53):
all of the tax cuts that almost everybody in America
gets in the Big Beautiful Bill are new tax cuts
rather than just maintaining existing the existing tax rates.
Speaker 3 (03:05):
And so, yes, it's bad.
Speaker 1 (03:07):
That it doesn't cut the debt and deficit, but I
think the way it's been described by some is unreasonable.
Speaker 3 (03:15):
Do you want to say anything about that?
Speaker 2 (03:18):
Look, it's an understandable point when it's going to brought
up a lot during the debate over the bill. The
issue is is that when they passed the original This
a little bit of technical issue. Ross right, Well, we
can hear that if in the original bill when they
passed in twenty seventeen, the tax cuts of which they've
done just extended the one big beautiful bill, they intentionally
set the tax cuts to expire this year to keep
(03:38):
the sticker price lower in twenty seventeen. So if you
didn't count the cost in twenty seventeen, and if you
don't count the cost now, you don't count the cost
at all. That's the issue. Our issue is that either
you count it at the front end or you count
it now. But to not count it at all is
why it works since the debt. At the same time,
you have some provisions that they put in the stills,
such as the things such as no taxes in overtime,
(03:59):
no tax on tips, things like that. In this bill
they set those to expire as well in twenty twenty eight,
and many people think there's no intention really lets those expire, right,
So that actually is keeping the cost lower. So that's
the issue is you got to count it somewhere, either
you did it in twenty seventeen or doing it now.
Speaker 1 (04:16):
That's a very fair point, and I haven't heard anyone
make that point until you just made it, And I
think there's I think that's a valid point. Count it
before or count it now, but you got to count
it somewhere. I think that's fair. I also, I don't
You didn't exactly say this, so I won't say I
agree with you because you didn't. You didn't really express
an opinion. But I've said on this show that while
(04:39):
I am for tax cuts generally for people who for
everybody who pays taxes in proportion to the amount of
taxes they pay, like I want everybody to get the
same percentage cut, I wasn't ams against exempting taxes, I'm sorry,
tips and overtime them even in part from taxation. Why
(05:00):
should a person who happens to make some part of
their income from tips pay less in tax than somebody
else who makes exactly the same amount of money but
doesn't take it in tips. And again, I realize that
kind of you know, in a way, it might make
me sound like, you know, a tax and spend liberal
or something, which I'm not. What I hate is increasing
(05:21):
the complexity of the tax code and trying to buy
voters with the tax code by making other people pay
for their tax deductions.
Speaker 3 (05:29):
Do you want to say anything about that?
Speaker 2 (05:31):
Well, I personally agree, I think with everything you just said. Ross.
When it comes to a tax there's some simple principles.
You want to try and design it in a way
that's pro proeconomic growth. So have a lot of the
distortions out there, have very clean it's much more pro
growth or less complicated it is. But also make it equitable.
Now equitable is we're just thrown around a lot of equity.
But in this sense, it means treating people fairly that
(05:51):
are in a similar situation. So don't treat people differently
during a same exact income situation by doing different carve
outs just because of whatever situation or position a thing
they might be in. If you make a fair, equitable, clean,
and pro growth, those are the principles you want a
tax code. We are very far away from that at
the federal level, and in many ways, you know, this
bill did put in more distortions, more carveouts for different
(06:15):
people that I think are less bill growth, less fair,
and costly. For my prior point, all.
Speaker 1 (06:20):
Right, there's going to be plenty of time to discuss
more big beautiful bill provisions as they start taking effect,
like some of the very big stuff is going to
be about Medicaid, but it doesn't even start taking effect
for two or three years. So let's switch gears for
a few minutes. Mike, And for those just joining, we're
talking with Mike Murphy, who's Senior VP and chief of
Staff at the Committee for a Responsible Federal Budget. I
(06:42):
want to talk about the future, the fiscal future of
Social Security because I don't think it's great, and I
don't think we have more than one or two percent
of politicians in Congress, I mean, who have the cajones
to try to do something about it.
Speaker 3 (06:58):
What do we need to know?
Speaker 2 (07:00):
First off, those Career is a vitally important program, and
I think it's worth setting that about seventy billion people
rely on and that number is going to go up
with the ever retiring of the breaker boom generation. What's
happening every day. But it is on a path to
insolvency loss within seven years. The Chief Actuary just confirmed
that last month, and we've done analysis on it as well.
(07:20):
In seven years, by twenty thirty two, the program is
not going to have money and its reserves anymore to
be able to pay schedule benefits. What happens at that
point is by law they're required to match whatever benefits
they have to revenue at that time, and the revenue
coming in at that time will require get this. It
will require and across the board automatic twenty four percent
(07:43):
cut to everybody on the program at that time. But
you're right, no politicians talking about this because the minute
and anyone says anything about solid security, they get attacked.
But the reality is, we got to get ahead of this.
There's many reasons to do it now rather than waiting
till twenty thirty two, but Washington always waitstill the deadline.
You do it now, the changes are less abrupt, less significant.
(08:04):
You phase them and get people time to prepare instead
of waiting for the last minute, or the change will
have to be harsher. So we got to get ahead
of this. Ross that seven years will be here before
before you know it.
Speaker 1 (08:15):
Yeah, and seven years is actually as you said, it'll
be here before you know it. It's not much time
to try to make changes. I used to think about
this issue more than I have lately, not because it's
gotten less important, but because it's become so clear to
me that nobody's going to do anything until we see
our own nation's fiscal blood running in the streets. But
one thing that occurs to me as an idea, and
(08:36):
I would like you to know if this is good, bad,
or just meh, And that would be raise the retirement
age by something like one or two months every year
over a very long period of time, or maybe three months. Right,
so after after ten years, you've added two and a
(08:56):
half or three years to the retirement age, and you
can include people who are in or even close to
retirement from the effect of that.
Speaker 3 (09:06):
Is that a thing that would make a difference.
Speaker 2 (09:09):
It's a great idea that many people who have proposed
over the years actually ross. It's one that any of
the ideas typically proposed, and there's different variations of it,
but most ideas about changing the eligibility age for retirement
to account for the fact that we have longer life
expectancies now, et cetera. Are often always prospective in the future,
(09:30):
like start this several years in the future, change it
by a month every year for several years. Those are
commonly how it's done. But that's not what it's often
said about it by those that attack it right. They
like to attack it as a deep benefit cut, etc. No,
these are common sense things you can start later on.
The problem is the longer you wait, the harder that
is to do, because you've got to get ahead of
(09:50):
this gap. But if you had done this like ten
years ago, it's actually been a lot better. The longer
you wait, the harder it is. And it's not the
only change. There's lots of other changes you can do
on the revenues and the fit side that makes sense.
The key is doing it sooner so you can get
the power of compounding working for you.
Speaker 1 (10:06):
Okay, so let me just jump in here because I'm
just about out of time, So one quick question and
we'll have you back as this develops overtime, as I'm
sure it will.
Speaker 3 (10:17):
Do.
Speaker 1 (10:17):
You believe there's any probable way that Congress will do
something other than just to straight up bailout of Social
Security to deal with this problem.
Speaker 2 (10:32):
So the one thing that gives me optimism is the
electoral political window is closing. And what I mean by
that is this is going to be the first time
when people go to the polls next year and when
I'm when I'm speaking here, I'm talking about Senate elections
that you're going to be going to the polls at
the federal level and actually voting people into office that
are very likely going to have a turn that's going
to be within this insolvency window. I think some people
(10:54):
are starting to get attention to that. We hear at
percolating a little bit in DC and the more so
outside groups in otherwise can start to be putting pressure
to say, hey, this date is coming, we need to
make this an election issue. So it should be an
election issue for Senate elections. Obviously would be an election
issue in the next presidential election in twenty eight. So
that gives me some optimism. 'ros. So it's going to
start to have a little bit more attention and get
(11:16):
people's get people's riled up a little bit to do
something sooner rather than later, because you're right. The alternative, therefore,
is what I'm concerned about just as much, is that
you get close to that window and everyone's going to
put their hands up and go, well, we honestly can't
let this cut happen to benefits. Let's just stay out out.
Let's barrow from the general fund and add to our
record high that we already have, which we can ill afford.
(11:37):
To do.
Speaker 3 (11:38):
That is what they're going to do.
Speaker 2 (11:40):
We need to get ahead of it.
Speaker 1 (11:41):
That is what they're going to do when they're going
to pass a big tax height to do it, and
they're going to throttle the economy, and everything is going
to get much worse because we've had twenty years plus
of politicians with no balls and I mean men and
women to address this problem. Mike Murphy is Senior VP
and Chief of Staff at the Comdie for a Responsible
(12:01):
Federal Budget CRFB dot org.
Speaker 3 (12:04):
Thanks so much for your time, Mike, appreciate it.
Speaker 2 (12:07):
Thanks for us for having me on all right.
Speaker 3 (12:08):
Glad to
I am pleased to welcome back to the show Mike Murphy,
who is senior vice president and chief of Staff at
the Committee for a Responsible Federal Budget. And we're going
to do just a few minutes of federal budget nerdiness
because partly because he and I are both nerds like that,
and also because these are things that really are going
(00:21):
to affect your life and potentially pretty soon. So Mike Murphy, first,
welcome back. It's good to have you here.
Speaker 2 (00:29):
Thanks for Roz's good to be with you again.
Speaker 1 (00:31):
So I want to cover two main topics with you, first,
the Big Beautiful Bill and then Social Security. So let's
start with the Big Beautiful Bill, and I would just
like you to give us some high level bullet points
to start on how states generally, and to the extent
that you have this information, Colorado specifically should expect the
state budget to be impacted by the Big Beautiful Bill
(00:53):
going forward, beyond the stuff that the state legislature just
had to deal with, I see the Medicaid stuff.
Speaker 2 (01:01):
Sure. So the Big Beautiful Bill Act in the past
over the summer in Congress had lots of different provisions
at a top line level, you know, at the national level.
We estimate that it's going to add to our death
and are told from the cost perspective. But the way
it has trickled down to the states mainly is that
they try to offset some of the costs. Within the bill,
(01:21):
they had a lot of provisions that required saving in
different programs, and many of which are joint federal state
or state of ministry programs you just mentioned, like Medicaid
or SNAP programs, et cetera. And so they're significant savings
that are then going to have to trickle down into
state budgets. So they're going to have to figure out
this year and the next and the coming years. But
that's a leading indicator ross because more of that is
(01:43):
to come. The idea here is bad news flows downhill.
We are in trillions and trillions of debt over thirty
seven trillion, highest levels of days of percent of our
economy passages World War two, and it's going up. More
of this is coming in the future, and that's why
states like Colorado are going to have to get ahead
of this. I don't know specific implications were us in
(02:03):
terms of the other Cater Snapp provisions for Colorado, but
all states, including Colorado are gonna have to grapple with this.
Speaker 1 (02:09):
So there's a lot of interesting aspects of this, and
you know, I want to focus on this more as
a matter of economics than politics, but just maybe a
hint of politics and what I'm what I'm gonna say here. So,
the Big Beautiful Bill does increase the deficit in the debt,
although I think it's a little bit mendacious of some
(02:31):
folks on the left and I'm not putting you in
that category who who talk about the bill raising the
deficit and debt by like four trillion dollars or something
in that What they include in that number is an assumption,
which I realized is based on the prior law, that
(02:53):
all of the tax cuts that almost everybody in America
gets in the Big Beautiful Bill are new tax cuts
rather than just maintaining existing the existing tax rates.
Speaker 3 (03:05):
And so, yes, it's bad.
Speaker 1 (03:07):
That it doesn't cut the debt and deficit, but I
think the way it's been described by some is unreasonable.
Speaker 3 (03:15):
Do you want to say anything about that?
Speaker 2 (03:18):
Look, it's an understandable point when it's going to brought
up a lot during the debate over the bill. The
issue is is that when they passed the original This
a little bit of technical issue. Ross right, Well, we
can hear that if in the original bill when they
passed in twenty seventeen, the tax cuts of which they've
done just extended the one big beautiful bill, they intentionally
set the tax cuts to expire this year to keep
(03:38):
the sticker price lower in twenty seventeen. So if you
didn't count the cost in twenty seventeen, and if you
don't count the cost now, you don't count the cost
at all. That's the issue. Our issue is that either
you count it at the front end or you count
it now. But to not count it at all is
why it works since the debt. At the same time,
you have some provisions that they put in the stills,
such as the things such as no taxes in overtime,
(03:59):
no tax on tips, things like that. In this bill
they set those to expire as well in twenty twenty eight,
and many people think there's no intention really lets those expire, right,
So that actually is keeping the cost lower. So that's
the issue is you got to count it somewhere, either
you did it in twenty seventeen or doing it now.
Speaker 1 (04:16):
That's a very fair point, and I haven't heard anyone
make that point until you just made it, And I
think there's I think that's a valid point. Count it
before or count it now, but you got to count
it somewhere. I think that's fair. I also, I don't
You didn't exactly say this, so I won't say I
agree with you because you didn't. You didn't really express
an opinion. But I've said on this show that while
(04:39):
I am for tax cuts generally for people who for
everybody who pays taxes in proportion to the amount of
taxes they pay, like I want everybody to get the
same percentage cut, I wasn't ams against exempting taxes, I'm sorry,
tips and overtime them even in part from taxation. Why
(05:00):
should a person who happens to make some part of
their income from tips pay less in tax than somebody
else who makes exactly the same amount of money but
doesn't take it in tips. And again, I realize that
kind of you know, in a way, it might make
me sound like, you know, a tax and spend liberal
or something, which I'm not. What I hate is increasing
(05:21):
the complexity of the tax code and trying to buy
voters with the tax code by making other people pay
for their tax deductions.
Speaker 3 (05:29):
Do you want to say anything about that?
Speaker 2 (05:31):
Well, I personally agree, I think with everything you just said. Ross.
When it comes to a tax there's some simple principles.
You want to try and design it in a way
that's pro proeconomic growth. So have a lot of the
distortions out there, have very clean it's much more pro
growth or less complicated it is. But also make it equitable.
Now equitable is we're just thrown around a lot of equity.
But in this sense, it means treating people fairly that
(05:51):
are in a similar situation. So don't treat people differently
during a same exact income situation by doing different carve
outs just because of whatever situation or position a thing
they might be in. If you make a fair, equitable, clean,
and pro growth, those are the principles you want a
tax code. We are very far away from that at
the federal level, and in many ways, you know, this
bill did put in more distortions, more carveouts for different
(06:15):
people that I think are less bill growth, less fair,
and costly. For my prior point, all.
Speaker 1 (06:20):
Right, there's going to be plenty of time to discuss
more big beautiful bill provisions as they start taking effect,
like some of the very big stuff is going to
be about Medicaid, but it doesn't even start taking effect
for two or three years. So let's switch gears for
a few minutes. Mike, And for those just joining, we're
talking with Mike Murphy, who's Senior VP and chief of
Staff at the Committee for a Responsible Federal Budget. I
(06:42):
want to talk about the future, the fiscal future of
Social Security because I don't think it's great, and I
don't think we have more than one or two percent
of politicians in Congress, I mean, who have the cajones
to try to do something about it.
Speaker 3 (06:58):
What do we need to know?
Speaker 2 (07:00):
First off, those Career is a vitally important program, and
I think it's worth setting that about seventy billion people
rely on and that number is going to go up
with the ever retiring of the breaker boom generation. What's
happening every day. But it is on a path to
insolvency loss within seven years. The Chief Actuary just confirmed
that last month, and we've done analysis on it as well.
(07:20):
In seven years, by twenty thirty two, the program is
not going to have money and its reserves anymore to
be able to pay schedule benefits. What happens at that
point is by law they're required to match whatever benefits
they have to revenue at that time, and the revenue
coming in at that time will require get this. It
will require and across the board automatic twenty four percent
(07:43):
cut to everybody on the program at that time. But
you're right, no politicians talking about this because the minute
and anyone says anything about solid security, they get attacked.
But the reality is, we got to get ahead of this.
There's many reasons to do it now rather than waiting
till twenty thirty two, but Washington always waitstill the deadline.
You do it now, the changes are less abrupt, less significant.
(08:04):
You phase them and get people time to prepare instead
of waiting for the last minute, or the change will
have to be harsher. So we got to get ahead
of this. Ross that seven years will be here before
before you know it.
Speaker 1 (08:15):
Yeah, and seven years is actually as you said, it'll
be here before you know it. It's not much time
to try to make changes. I used to think about
this issue more than I have lately, not because it's
gotten less important, but because it's become so clear to
me that nobody's going to do anything until we see
our own nation's fiscal blood running in the streets. But
one thing that occurs to me as an idea, and
(08:36):
I would like you to know if this is good, bad,
or just meh, And that would be raise the retirement
age by something like one or two months every year
over a very long period of time, or maybe three months. Right,
so after after ten years, you've added two and a
(08:56):
half or three years to the retirement age, and you
can include people who are in or even close to
retirement from the effect of that.
Speaker 3 (09:06):
Is that a thing that would make a difference.
Speaker 2 (09:09):
It's a great idea that many people who have proposed
over the years actually ross. It's one that any of
the ideas typically proposed, and there's different variations of it,
but most ideas about changing the eligibility age for retirement
to account for the fact that we have longer life
expectancies now, et cetera. Are often always prospective in the future,
(09:30):
like start this several years in the future, change it
by a month every year for several years. Those are
commonly how it's done. But that's not what it's often
said about it by those that attack it right. They
like to attack it as a deep benefit cut, etc. No,
these are common sense things you can start later on.
The problem is the longer you wait, the harder that
is to do, because you've got to get ahead of
(09:50):
this gap. But if you had done this like ten
years ago, it's actually been a lot better. The longer
you wait, the harder it is. And it's not the
only change. There's lots of other changes you can do
on the revenues and the fit side that makes sense.
The key is doing it sooner so you can get
the power of compounding working for you.
Speaker 1 (10:06):
Okay, so let me just jump in here because I'm
just about out of time, So one quick question and
we'll have you back as this develops overtime, as I'm
sure it will.
Speaker 3 (10:17):
Do.
Speaker 1 (10:17):
You believe there's any probable way that Congress will do
something other than just to straight up bailout of Social
Security to deal with this problem.
Speaker 2 (10:32):
So the one thing that gives me optimism is the
electoral political window is closing. And what I mean by
that is this is going to be the first time
when people go to the polls next year and when
I'm when I'm speaking here, I'm talking about Senate elections
that you're going to be going to the polls at
the federal level and actually voting people into office that
are very likely going to have a turn that's going
to be within this insolvency window. I think some people
(10:54):
are starting to get attention to that. We hear at
percolating a little bit in DC and the more so
outside groups in otherwise can start to be putting pressure
to say, hey, this date is coming, we need to
make this an election issue. So it should be an
election issue for Senate elections. Obviously would be an election
issue in the next presidential election in twenty eight. So
that gives me some optimism. 'ros. So it's going to
start to have a little bit more attention and get
(11:16):
people's get people's riled up a little bit to do
something sooner rather than later, because you're right. The alternative, therefore,
is what I'm concerned about just as much, is that
you get close to that window and everyone's going to
put their hands up and go, well, we honestly can't
let this cut happen to benefits. Let's just stay out out.
Let's barrow from the general fund and add to our
record high that we already have, which we can ill afford.
(11:37):
To do.
Speaker 3 (11:38):
That is what they're going to do.
Speaker 2 (11:40):
We need to get ahead of it.
Speaker 1 (11:41):
That is what they're going to do when they're going
to pass a big tax height to do it, and
they're going to throttle the economy, and everything is going
to get much worse because we've had twenty years plus
of politicians with no balls and I mean men and
women to address this problem. Mike Murphy is Senior VP
and Chief of Staff at the Comdie for a Responsible
(12:01):
Federal Budget CRFB dot org.
Speaker 3 (12:04):
Thanks so much for your time, Mike, appreciate it.
Speaker 2 (12:07):
Thanks for us for having me on all right.
Speaker 3 (12:08):
Glad to
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