Right Wing Nut House



Filed under: Entitlement Crisis, FrontPage.Com, Politics — Rick Moran @ 1:12 pm

My latest article is up at FrontPage.com and it is about the curious disconnect both parties exhibited between reality and politics.

Neither side made much mention at all of our entitlement crisis.

And a crisis it is.

Cosmetic gambits like “spending freezes” and “doc fixes” can’t even begin to address the danger. This is political gamesmanship and it should anger us that the politicians know it but do it anyway. It’s not that the crisis is hidden, or has come upon us suddenly. We’ve known for decades where we were headed, but Washington chose the easy way: the politicians ignored the problem, kicking the can down the road, assuming they would be well into retirement — living off their extravagant congressional pensions — before history forced our hand.

The can has now been kicked into a cul de sac and there’s no way we can start kicking it back down the road. It may not be our fault, but we’re the ones who are going to have to pay for all of these promises so recklessly made by previous generations. One way or another, a solution will be found — or imposed — on us. Those are the only alternatives. Either the politicians will find the political courage (that they won’t get credit for) to start cutting and slashing at the monster or the monster will solve our problem for us by devouring us.

A few bare bones numbers are needed to prove that this is not hyperbole or political exaggeration. If we were to fulfill the promises made to every American from those born as I write this to the oldest citizen regarding Social Security and Medicare, it will cost us at least $130 trillion. Long before then, the entitlement crunch will have destroyed our economy. By 2016, 71% of the federal budget will be dedicated to paying entitlements of one form or another, the vast percentage of that being Social Security and Medicare.

There are 78 million baby boomers set to retire over the next 30 years, all expecting that monthly Social Security check for the rest of their lives. The significance of this is a matter of demographics. The number of workers paying into Social Security was 5.1 per retiree in 1960; this declined to 3.3 in 2007 and is projected to decline to 2.1 by 2035. We are currently in hock to the Social Security Trust Fund to the tune of $2.5 trillion. This number is expected to rise to $3.8 trillion by 2019. But by 2015, payments to Social Security beneficiaries will begin to exceed tax receipts. And by 2037, payments to recipients would start declining automatically – whether we wanted them to or not. The Trust Fund would be exhausted and Congress would be unable to tap any other revenue streams from the government to pay for it.

I erred in the year that Social Security’s payments to beneficiaries would exceed tax receipts. It’s not 2015. It’s this year.

Ain’t that lovely?

There are only two ways this is going to end and neither is without massive pain. The first is, we find the courage to confront the crisis and make the painful adjustments necessary to salvage our future. Or, we do nothing and get rid of the problem when the economy collapses.

Matt Welch writes that we “don’t do big things” anymore.

Here’s a reality check: We will not have high-speed rail within Segwaying distance of 80 percent of the country, ever. We will not get 80 percent of our electricity from “clean energy sources” by 2035, unless someone far outside the halls of government invents a snail that eats trash and poops hydrogen. Obama won’t veto every bill that arrives on his desk with earmarks–re-watch that part of the speech last night; no one believed him.

Why won’t these things happen? Because, as Rep. Paul Ryan rightly emphasized last night, the only real policy issue in America right now is that we are on the verge of fiscal catastrophe because cannot afford the government we’re paying for today, let alone the one we’re promising for tomorrow. And the president, though he is much more serious on this issue than a huge swath of his political party, is nonetheless not remotely serious about this issue. Vowing to cut $400 billion over 10 years (a plan that, judging by the two people clapping when he proposed it, will likely be cut to ribbons if it survives through Congress), at a moment when the deficit for this year is more than three times that, indicates that Democrats (and a helluva lot of Republicans as well) are hunkering down in our awful status quo–half-heartedly tinkering around the edges of spending, making incremental changes this way and that, then launching new moonshots and redoubling old impotent efforts. Politicians have put us on the precipice of financial ruin, and they show no indication of doing a damned thing about it.


There are more than a quarter million people working at the Departments of Agriculture and Commerce. Veterans Affairs and Homeland Security combined nearly pass the half-million mark. And at a moment of grave fiscal peril, we continue to spend half the planet’s money on defense, with Obama et al expecting thunderous applause for snipping out “tens of billions” from future defense spending growth. We continue to arrest 800,000-plus people a year for smoking or trading a plant that makes you want to eat Pop Tarts.

No, these people are not serious about the task at hand. The state of our union, as measured by the competence of people in power, is a f***ing disgrace.

It would be the biggest thing America has done since Apollo if we could attack the entitlement problem successfully. It will require the same amount of effort, despite the obvious fact that it isn’t very sexy, nor will it excite the American people.

In fact, it will have the opposite effect. In order to tackle Medicare and Social Security unfunded liabilities, no less than a drastic alteration in the way Americans think about government will have to take place. Old people will be scared and angry. Younger people might feel betrayed. The only ones who will be grateful are those yet unborn or in their infancy who will have vestiges of these programs to help them when they get older.

One big adjustment Americans are going to have to make is they are going to be paying more for their own health care. Hopefully, this will make everyone realize that there is no free lunch and that a kind of self-rationing protocol where people will only use the health care system when they truly need it will gradually take hold. The “fee for service” model will have to go and other ways to reimburse doctors and hospitals for their work will have to be found.

As for Social Security, there will probably never be a political consensus to privatize it - no matter how bad it gets. The program is much easier to deal with, however, simply by raising taxes and/or increasing the retirement age. That might buy us a few decades. Eventually, even that bandaid won’t be enough and we’ll be back to where we are today. Why some kind of means test, where those who are tapping another pension, or whose income without Social Security is above a certain level could receive less is a mystery. We have means tests for all kinds of entitlements and Social Security should be similarly administered.

Every year we delay adds a few trillion to our unfunded liabilities - now standing at $130 trillion. Here’s Bruce Bartlett on what we have to look forward to:

To summarize, we see that taxpayers are on the hook for Social Security and Medicare by these amounts: Social Security, 1.3% of GDP; Medicare part A, 2.8% of GDP; Medicare part B, 2.8% of GDP; and Medicare part D, 1.2% of GDP. This adds up to 8.1% of GDP. Thus federal income taxes for every taxpayer would have to rise by roughly 81% to pay all of the benefits promised by these programs under current law over and above the payroll tax.

Times’s up, Congress, Mr. President.

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