The reason the debt issue is an intractable problem is no one wants to tell their parents that they are the problem.
Robert J. Samuelson: Its the elderly, stupid
By Robert J. Samuelson
Thursday, Jul 28, 2011
If leadership is the capacity to take people where they need to go whether or not they realize it or want it then weve had almost no leadership in these weeks of frustrating and maddening debate over the budget and debt ceiling. Theres been an unspoken consensus among President Obama, congressional Democrats and Republicans not to discuss the central issue underlying the standoff. Weve heard lots about compromise or its absence. Weve had dueling budgets with differing mixes of spending cuts and tax increases. But weve heard almost nothing of the main problem that makes the budget so intractable.
Its the elderly, stupid.
By now, its obvious that we need to rewrite the social contract that, over the past half-century, has transformed the federal governments main task into transferring income from workers to retirees. In 1960, national defense was the governments main job; it constituted 52 percent of federal outlays. In 2011 even with two wars it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.
These transfers have become so huge that, unless checked, they will sabotage Americas future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.
Older Americans do not intend to ruin America, but as a group, thats what theyre about. On average, the federal government supports each American 65 and over by about $26,000 a year (about $14,000 through Social Security, $12,000 through Medicare). At 65, the average American will live almost 20 more years. Should these sizable annual subsidies begin later and be less for some? Its hard to discuss the budget realistically if you ignore most of what the budget does.
Thats been our course. Obama poses as one brave guy for even broaching entitlement reform with fellow Democrats. What he hasnt done is to ask in language that is clear and comprehensible to ordinary people whether many healthy, reasonably well-off seniors deserve all the subsidies they receive. That would be leadership. Obama is having none of it. But the shunning is bipartisan. Tea Party advocates broadly deplore government spending without acknowledging that most of it goes for popular Social Security and Medicare.
I have written about these issues for years. But facts are no match for the self-interest of about 50 million Social Security and Medicare recipients and a natural sympathy for older people and for people who eagerly look forward to retirement. Public opinion becomes contradictory. While 70 percent of respondents in a Pew Research Center poll judged budget deficits a major problem, 64 percent rejected higher Medicare premiums and 58 percent opposed gradual increases in Social Securitys retirement age.
What sustains these contradictions is a mythology holding that, once people hit 65, most become poor. This justifies political dogma among Democrats that resists Social Security or Medicare cuts of even one dollar.
But the premise is wrong. True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (thats for individuals, and couples would be higher).
The essential budget question is how much we allow federal spending on the elderly to crowd out other national priorities. All else is subordinate. Yet, our leaders dont debate this question with candor or intelligence. We have a generation of politicians cowed and controlled by AARP. We need to ask how much todays programs constitute a genuine safety net to protect the vulnerable (which is good) and how much they simply subsidize retirees private pleasures.
Our politicians make perfunctory bows to entitlement reform and consider that theyve discharged their duty, even if nothing changes. We need to recognize that federal retiree programs often represent middle-class welfare. Past taxes were never saved to pay future benefits. We need to ask the hard questions: Who deserves help and who doesnt? Because Social Security and Medicare are so intertwined in our social fabric, changing them could never be easy. But the fact that weve evaded the choices for so long is why the present budget impasse has been so tortuous and why, if we continue our avoidance, there will be others.
Robert J. Samuelson: Its the elderly, stupid
By Robert J. Samuelson
Thursday, Jul 28, 2011
If leadership is the capacity to take people where they need to go whether or not they realize it or want it then weve had almost no leadership in these weeks of frustrating and maddening debate over the budget and debt ceiling. Theres been an unspoken consensus among President Obama, congressional Democrats and Republicans not to discuss the central issue underlying the standoff. Weve heard lots about compromise or its absence. Weve had dueling budgets with differing mixes of spending cuts and tax increases. But weve heard almost nothing of the main problem that makes the budget so intractable.
Its the elderly, stupid.
By now, its obvious that we need to rewrite the social contract that, over the past half-century, has transformed the federal governments main task into transferring income from workers to retirees. In 1960, national defense was the governments main job; it constituted 52 percent of federal outlays. In 2011 even with two wars it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.
These transfers have become so huge that, unless checked, they will sabotage Americas future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.
Older Americans do not intend to ruin America, but as a group, thats what theyre about. On average, the federal government supports each American 65 and over by about $26,000 a year (about $14,000 through Social Security, $12,000 through Medicare). At 65, the average American will live almost 20 more years. Should these sizable annual subsidies begin later and be less for some? Its hard to discuss the budget realistically if you ignore most of what the budget does.
Thats been our course. Obama poses as one brave guy for even broaching entitlement reform with fellow Democrats. What he hasnt done is to ask in language that is clear and comprehensible to ordinary people whether many healthy, reasonably well-off seniors deserve all the subsidies they receive. That would be leadership. Obama is having none of it. But the shunning is bipartisan. Tea Party advocates broadly deplore government spending without acknowledging that most of it goes for popular Social Security and Medicare.
I have written about these issues for years. But facts are no match for the self-interest of about 50 million Social Security and Medicare recipients and a natural sympathy for older people and for people who eagerly look forward to retirement. Public opinion becomes contradictory. While 70 percent of respondents in a Pew Research Center poll judged budget deficits a major problem, 64 percent rejected higher Medicare premiums and 58 percent opposed gradual increases in Social Securitys retirement age.
What sustains these contradictions is a mythology holding that, once people hit 65, most become poor. This justifies political dogma among Democrats that resists Social Security or Medicare cuts of even one dollar.
But the premise is wrong. True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (thats for individuals, and couples would be higher).
The essential budget question is how much we allow federal spending on the elderly to crowd out other national priorities. All else is subordinate. Yet, our leaders dont debate this question with candor or intelligence. We have a generation of politicians cowed and controlled by AARP. We need to ask how much todays programs constitute a genuine safety net to protect the vulnerable (which is good) and how much they simply subsidize retirees private pleasures.
Our politicians make perfunctory bows to entitlement reform and consider that theyve discharged their duty, even if nothing changes. We need to recognize that federal retiree programs often represent middle-class welfare. Past taxes were never saved to pay future benefits. We need to ask the hard questions: Who deserves help and who doesnt? Because Social Security and Medicare are so intertwined in our social fabric, changing them could never be easy. But the fact that weve evaded the choices for so long is why the present budget impasse has been so tortuous and why, if we continue our avoidance, there will be others.
