December
28, 2005
Our Entitlement Paralysis
By Robert
Samuelson
WASHINGTON -- 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.
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. President Bush's ill-fated plan for ``personal''
investment accounts in Social Security was a perfect example.
The president complained about unaffordable entitlement spending
but never said how his plan would cure that problem. There was
a reason: it wouldn't. In its first decades, it would mean more
spending, not less. Government would pay for both personal accounts
and traditional benefits.
Democrats correctly
saw Bush's proposal as a political attempt to steal their signature
issue -- Social Security. For younger voters, the ``personal accounts''
might make the program a Republican product. It might cease being
liberalism's crown jewel. People shouldn't depend on ``risky''
stocks for Social Security, they said. Even many Republicans abandoned
Bush.
Doubting Bush's motives
is easy, because in 2003, he had engaged in a similar political
makeover for Medicare, through his drug benefit. It aimed to ingratiate
the president with elderly voters in 2004. But the potential cost
is huge. By 2015, the drug benefit could increase Medicare costs
by 30 percent, says the CBO. All of Bush's complaints about runaway
entitlement spending reek of hypocrisy.
But ascribing today's
deadlock exclusively to Bush's clumsy partisanship is too glib.
It ignores the many years in which Democrats have shamelessly
exploited for political advantage any threats to Social Security
and Medicare benefits. It also overlooks the deeper and more intractable
source of our stalemate: competing moral claims.
If we were creating
Social Security and Medicare today, we'd set different terms than
now exist. The first baby boomers hitting 60 include Bill Clinton,
Donald Trump and Diane Sawyer. It's doubtful we'd provide benefits
for any of these wealthy people. Indeed, we'd probably be less
generous toward many affluent retirees, because we'd question
why age alone (not need) should qualify people for government
assistance. We'd also note vast changes since 1935 (Social Security's
creation) and 1965 (Medicare's):
--In 1935,
about 6 percent of the population was 65 and over; now, it's nearly
13 percent and headed toward 20 percent in 2030.
-- Life expectancy at 65 was less than 13 years in 1935; now,
it's 18 and rising.
--In 1965, one of three payroll jobs was in manufacturing, mining
and construction; now, that's one in six.
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.
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.
©
2005, Washington Post Writers Group
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