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Paying the price of political indulgence
Posted by: McQ on Wednesday, December 28, 2005

Yesterday, the Atlanta Journal-Constitution carried a story about the present national budget that throws some light on a looming problem that most political junkies have been talking about for years:
Three growing entitlement programs consumed nearly half of all federal spending in 2004, and budget analysts expect them to make up an even bigger share in the future.

Social Security, Medicare and Medicaid accounted for more than $1 trillion in the 2004 budget year, according to the Consolidated Federal Funds Report being released today by the Census Bureau.

Overall federal spending was $2.2 trillion, an increase of 5 percent from 2003.

"The total federal spending increase is actually down a bit from recent years," said Gerard Keffer, chief of the Census Bureau's federal programs branch. "It had been running 6 to 8 percent in the past several years."

For years, Washington has been fighting over the growth of entitlement programs. Analysts think the fight will continue for years.

"I think it's absolutely essential and inevitable that we are going to reform those programs," said Rudolph Penner, a senior fellow at the Urban Institute, which researches social issues. "How, is another question. There's very little interest, now."

Spending on Medicare, the federal health insurance program for the elderly, is set to increase with the introduction of a drug benefit in January. The federal government estimates it will spend about $724 billion over 10 years to provide the benefit.

Other factors contributing to spending increases include an aging population and soaring health care costs, Penner said. The oldest baby boomers will start turning 60 in January, and once they start qualifying for Social Security benefits, costs will grow at an even faster pace.
$1 trillion dollars spent on entitlements. The price of political indulgence, and a price growing steeper every year. For a group who so loves to invoke "the children" at every step, it would seem that politicians, with the help of "the people" have essentially sold our children into economic slavery for the foreseeable future.

Robert Samuelson also comments today:
As noted by recent cover stories in Newsweek and Business Week, the first of the roughly 77 million baby boomers turn 60 in 2006. J. Walker Smith of the polling firm of Yankelovich Partners told Newsweek that many boomers ``think they're going to die before they get old''—a reference to one survey in which boomers defined old age as starting around 80. Business Week asserted that fifty- and sixty-somethings consider their ``middle age a new start on life'' to indulge hobbies, begin new careers or remarry. These portraits of vigorous baby boomers clash with another reality: their huge federal retirement benefits may seriously damage the economy and American politics.

Our continued unwillingness to address this disconnect counts as one of 2005's big stories. We should ask ourselves: Why? After all, the need is well known. Consider the Congressional Budget Office's just released projections. By 2030, Social Security, Medicare and Medicaid may cost 15 percent of national income —almost double their level in 2000 and equal to 75 percent of today's federal budget. Left alone, these programs would require massive tax increases, cause immense deficits or crowd out important other government programs.
Note his warning, a warning which has been sounded by others over the years, but roundly ignored. Massive tax increases. Immense deficits. The possibility they may crowd out actual Constitutionally mandated federal programs (like defense?).

None of this, of course, is acceptable to anyone you talk too. But the reality is nothing, absolutely nothing, is being done about it. And there's a very simple reason:
Still, we fiddle. On one level, the paralysis is understandable. No one wants to offend older voters, so we dance around the basic issues without truly engaging them.
Or as Samuelson says without really saying it, our politicians fear for their jobs and power if they were actually to address the issue properly and take the necessary action.For a group who so loves to invoke "the children" at every step, it would seem that politicians, with the help of "the people" have essentially sold our children into economic slavery for the foreseeable future.So we have a political "Catch 22", in which politicians find that the proper course is also the course of political suicide. And, with the large "baby boomer" bloc beginning its entry into the "entitlement zone", it's less likely—instead of more likely—that these issues will be addressed in the near future. Like most issues that require a moral and political will, but may have a cost to those who have to carry the message, our elected representatives prefer to defer the problem until it becomes a crisis. Or said another way, they don't have the moral or political will necessary to do what is right if it costs them their ability to stay in power.

But they're not the only problem. Obviously, the programs aren't called "entitlements" for nothing. And that is the sense which drives their continuation. People feel entitled to what they provide.

There's a very good reason for that, however. Those who feel entitled have been paying into those systems (i.e. Social Security, Medicare and Medicaid) for their entire working lives. So the entitlements have been created by those payments, just as paying into a life insurance program for 30 years certainly makes the beneficiaries feel an entitlement to the payout of the policy upon the death of the policy holder.

Samuelson's solution is as follows:
People live longer, are healthier and have less grueling jobs. They can work longer and receive benefits later. We'd set higher eligibility ages. It's too expensive for government—meaning taxpayers—to support them for 20 or 30 years. We'd concentrate aid on the neediest and the oldest, including people whose longevity exhausted their savings. We'd regard this as a moral obligation of a decent society.

Well, if that's what present conditions suggest, why do we tolerate a system that automatically pays many people who are well off and in good health? The answer is that people who have been promised Social Security and Medicare benefits believe they have a moral claim to receive them, even if—absent the promise—their claim would be dubious. True, people need to plan their futures. But the moral logic also rationalizes self-interest and selfishness. The compromise is to unwind gradually those promises that no longer make sense and are ultimately unworkable.
Let's review his solution:
  • Set higher eligibility ages
  • Concentrate aid on neediest & oldest
  • Means test
  • "Unwind" gradually from that which is unworkable
The problem with the first three "solutions" comes back to the word "entitlement". No matter how rich or healthy someone is, the simple fact that they've been forced to pay for a promised program for their entire working life leaves them not at all inclined to see the rules changed when they reach the point in their life when they've been promised the benefit for their payment.

No matter how hard Samuelson attempts to characterize such a refusal as good "moral logic" in the face of "self-interest and selfishness", he fails to actually justify such a denial on moral grounds unless you buy into "the common good" argument. I.e. it is your duty to pay into this system whether you derive any benefit from it or not, and it is the government's job to arbitrarily decide based on the political or economic exigencies of the time, who will derive benefit (regardless of past promises). This is a big "no sale" to the vast majority of Americans who firmly believe in "I paid and now I expect to get that for which I paid". That is the attendent moral logic applied, not the "common good" argument.

That leaves a real political dilemma, doesn't it? Faced with the looming fiscal crisis and the majority opinion that those that have paid into the system are indeed entitled to a payout from the system, politicians (the people who got us into this mess by indulging us quite outside the bounds of their Constitutional power) don't know where to turn.No matter how rich or healthy someone is, the simple fact that they've been forced to pay for a promised program for their entire working life leaves them not at all inclined to see the rules changed when they reach the point in their life when they've been promised the benefit for their payment.So they studiously ignore the problem. Some, like many Democrats did with Social Security reform, simply declare there is no problem. Those that recognize the problem silently calculate when it will reach a crisis and thank their lucky stars they'll most likely be retired by then.

What we have to do is found in Samuelson's fourth point: "'Unwind' gradually from that which is unworkable."

This in the face of a new entitlement recently added by this Republican administration (Medicare drug supplement).

Frankly the entire system is unworkable. Unwinding would take decades and generations. It will take politicians who are willing to put their political careers on the line to make hard decisions. Probably the hardest of all decisions will be explaining to the American people who have been sold on these entitlements that it isn't the job of government to provide them.

Said another way, the way to unwind from these present programs is to pick a date after which anyone born has no entitlement upon which to depend. If the nation feels it has a moral obligation, as Samuelson contends, to the neediest among us, then nothing precludes us from offering programs for them. But no one should mistake that sort of a program as an entitlement for all (or even for those which the program addresses). It is temporary help, nothing more.

If not, if we don't realize and sell the concept that it is not the function or job of government to establish and manage 'entitlement programs', we're headed for a fiscal trainwreck.
Until we challenge this moral logic—the crux of entitlement politics—public opinion will resist change and our paralysis will continue. Meanwhile our resulting inaction compounds many future dangers of an aging society: higher taxes, slower economic growth, squeezed government spending for non-elderly programs and more conflict between younger taxpayers and older beneficiaries.
The time to challenge this moral logic is now, not when it becomes a crisis. Consider this a shot fired in that war.
 
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Comments
Personally I blame Bush and Capitalism, and modern Science that allows people to live too long...
 
Written By: Joe
URL: http://
Agriwelfare and paying for bridges in states that already have budget surpluses while trying to figure ways to renig on benefits workers spend a lifetime funding reveals a governing class in deep, deep denial.

A possible palliative—term limits. That way, there is no career on Capitol Hill to kill. The Founders didn’t envision a legislature of lifetime pork vendors, after all.
 
Written By: The Owner’s Manual
URL: http://gcruse.typepad.com
How about this, then:
Don’t breathe a word about means testing. Don’t breathe a word about setting higher age limits. Just pass a new tax that takes 100% of social security income at age 60, and then gradually reduces starting from age 70, depending on the person’s other incomes.
They are still getting paid back their input, but it is being taxed.
Democrats can’t oppose it: it’s a new tax that exempts those who need the money.
Republicans can’t oppose it: it decreases payouts.

Win-Win!

Okay, even I realize it’s not that simple. But I’d like to hear people’s thoughts on why it could never work, preferably with a counter-suggestion.

Also, if such a tax ever gets passed, I’d like you to remember you heard it here, first.
 
Written By: Nathan
URL: http://brain.mu.nu/
A possible palliative—term limits. That way, there is no career on Capitol Hill to kill. The Founders didn’t envision a legislature of lifetime pork vendors, after all.
The only problem with this solution is that, once out of office, former representatives and senators go on to become lobbyists or think tank pundits. Both of these venues allow these FRaSs to continue wielding significant influence. Meanwhile their neophyte replacements quickly realize that you have to consort with the powerful in order to get things done and to solidify a similar cushy job of their own 10-15 years down the line. In sum, expect more of the same.

The only solution, IMHO, is an engaged public. 120 million people voted for President; an election where individual votes account for next-to-zip, especially considering the intervening layer of the Electoral College between the voter and the President. Meanwhile, less than half of that number will participate in the ’06 elections where their votes matter more directly and are more significant. All the incumbent has to do to stay in office is keep the base energized and General Apathy will do the rest.

This inverse relationship between participation and vote significance continues all the way down to the local level. In my town of 9000 registered voters only 200-300 bother to show up at town meetings! The rest piss and moan about the high taxes that go up 10-15% per year as they just bend over and take it.

If we took better interest of how our society operates at all levels maybe our elected officials, neophyte and veteran alike, will take better interest in the public interest. As things now stand there is no such incentive. Rather, the tendency to pad one’s own interests win out and will continue to do so as long as the larger public simply doesn’t give a damn.
 
Written By: D
URL: http://
Well, I remain cautiously optimistic. We’ll probably muddle through some how. I don’t think term limits are the answer. Experience counts for something and if you term limit folks, you grant even more power to committee staff and the bureaucrats. Oh and BTW, the Founding Fathers were PROFESSIONAL POLITICIANS. Can anyone tell me what they did in private life that made them money? So let’s be cautious in citing the Founders about the perils of politicians.
 
Written By: Joe
URL: http://
We turn presidents over every eight years at the longest, and the Republic survives just fine. Why limit it to the executive branch?

And, D, when a former office holder has to compete with hundreds of other former office holders to succeed as a lobbyist, I don’t think they will find that career as rewarding as it is today.
 
Written By: The Owner’s Manual
URL: http://gcruse.typepad.com
We turn presidents over every eight years at the longest, and the Republic survives just fine. Why limit it to the executive branch?
I don’t believe in that amendment either. OK, if you think you can push through a Constitutional Amendment limiting terms drive on.

IF you want to reduce the power of lobbyists, simply reduce the scope of the Federal Government.
 
Written By: Joe
URL: http://
We turn presidents over every eight years at the longest, and the Republic survives just fine. Why limit it to the executive branch?
Hmm...and it wouldn’t hurt my dead uncle to feed him chicken soup. Term limits keeps getting batted around as the panacea that most certainly they are not. AFA "turn[ing] presidents over every eight years" is concerned, what have we gained? Aside from removing the appearance of the chief executive being a king or somesuch there is no practical benefit of such limitation.

As a counterpoint, "when a former office holder has to compete with hundreds of other former office holders to succeed as a lobbyist" then the feeding frenzy at the public trough may, in fact, become more furious...that is, unless an engaged public calls the critters on it and forces them to cool it.
 
Written By: D
URL: http://
Increases in worker productivity will allow fewer workers to produce enough to support our entitlement programs. If it were not for illegal immigrants, this solution would already be evident. Can politicians outspend these increases? Oh hell yes. And they will if not stopped. Seems pretty clear to me what needs to be done.
 
Written By: notherbob2
URL: http://
There is one potential player in this whole game that never gets mentioned: the Supreme Court. If the Court does manage to achieve a majority of strict constructionists, and if the fiscal situation becomes so dire that national security/stability is threatened, it is at least conceivable that the SC could declare some entitlements unconsitutional and direct Congress to perform the "unwinding" that Samuelson mentions. It is a long-shot scenario, but given the craven nature of politicians I just don’t see a solution emerging from the Executive or Legislative branches.

And I do fear that this could actually lead to some sort of violent overthrow 30 or 40 years down the road if the young are expected to work like serfs on the manor lands of the elderly.
 
Written By: Dan
URL: http://
I believe the goverment will meet its obligation.The fed will merely run the printing presses with a third shift, put a cap on colas and runup inflation to 15%, paying off the boomers and foreign debt holders with lesser valued dollars. All will save face and the elite will corner the markets as in 1929 and subsequent years.
 
Written By: Loren
URL: http://

 
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