Will the White House Avoid the 'Entitlement Spending' Trap?
As President Obama's "fiscal responsibility summit" consumes much of Washington's oxygen today, a critical question is being largely ignored in the mainstream media: Will this administration dispense with the notion of an overall "entitlements" crisis and begin treating Social Security and Medicare like the separate issues they are?
The New York Times raises the issue, in a back-handed fashion, by reporting that congressional Democrats are warning Obama against attempting to shore up Social Security's long-term fiscal health. Per the Times:
Those who oppose action said Mr. Obama must focus on his bigger priority -- health care legislation to expand access to insurance and reduce the costs of care. They argue that success there would help control the unsustainable growth of Medicare and Medicaid, the government's other major benefit programs, which together pose a far greater fiscal problem.
It's not clear which Capitol Hill Democrats helped quash the idea of announcing a "Social Security task force" during today's fiscal summit -- but Obama would be well-served to heed their advice.
Social Security, which will remain fully solvent for more than 30 years, is a minor problem compared with the unsustainable growth of Medicare , particularly the private Medicare Advantage (MA) plans that have bloated the program's bottom line without offering tangible improvements in case.
As Joe Conason observes, the Obama team has long emphasized that its budget, and tomorrow's presidential address to Congress, will focus on health care. The two health-related proposals that are reportedly under consideration for the White House budget -- trimming MA payments and taxing employers that don't provide health coverage -- are a good start ...
... but if previous congressional proposals on MA are any guide, cutting subsidies for private plans will at best yield $50 billion in savings over 10 years. Ensuring Medicare solvency, while paying for broader health care reform, will require the freeing-up of a good deal more cash. One hopes the White House will start talking loudly about where to find those savings, not what to do with the manageable state of Social Security.
Josh
Matt
Eric
Brian
Whatever went on behind the scenes, this is good news. As is that fact that reports that Peter Peterson would be a keynote speaker turned out to be baseless.
February 23, 2009 10:47 AM | Reply | Permalink
Yep, medicare and medicaid can be addresed and the situation resolved with healthcare reform. Add in the payments to the criminal insurance companies to the revenue required for medicare and medicaid and those two programs would be totally in the green and every american would have healthcare. Total healthcare costs would go down substantially. Get rid of the insurance carriers and prop up medicare and medicaid with the savings. It's not really rocket science. Medicare for all is the way to go. It would dramatically help the ailing economy as well.
February 23, 2009 10:50 AM | Reply | Permalink
That's true, but it ignores the unspeakable elephant in the room: The so-called Trust Fund has been raided.
SS taxes have effectively been paying for general spending for a long time. If SS ever needs to draw on the funds allegedly held in its Trust Fund, it'll have to be paid back. That means higher taxes. And you know what that means!
February 23, 2009 10:53 AM | Reply | Permalink
February 23, 2009 10:59 AM | Reply | Permalink
When they complain just remind them what the civil penalty for misappropriation of funds will cost them in court.
February 23, 2009 1:54 PM | Reply | Permalink
Agreed, but what would you have them do with all the cash they're piling up? Invest it in some other country's debt instruments? Put it in the stock market? Park it in banks?
At least by putting it into U.S. debt instruments, we're reducing the amount of the national debt owned by China and Japan and the oil sheiks and, by reducing the supply of bonds availible for public purchse, we're keeping the rate we have to pay low.
February 23, 2009 11:02 AM | Reply | Permalink
"reducing the amount of the national debt owned by China and Japan and the oil sheiks"
I wish. We're just reducing the rate that that debt is growing. These guys still own us.
Obviously, we've got a lot more work to do. If the economy rebounds quicker than their models predict, then the Fed will have more tax money to help alleviate this. But if their models are overly-optimistic, then it's worse.
February 23, 2009 11:53 AM | Reply | Permalink
Good point about where else to park the dough.
Claiming a SS crisis is a tacit acknowledgement that covering the loss of SS overpayments is politically impossible, to say nothing of paying back what's been "borrowed".
If you accept that, then there IS a SS crisis.
February 23, 2009 11:56 AM | Reply | Permalink
Oh, and by the way, far be it from me to attack the official left of center blog CW that if Democrats dare mention the words "Social Security" and "reform" in the same breath, they will summon an all-powerful Republican demon who will use his magic evil Republican superpowers to put the whole trust fund and all future receipts into the stock market . .
. . . but is anyone here hoping to retire within the next twenty years or so and living more than thirty years from today? Just wondering.
February 23, 2009 11:06 AM | Reply | Permalink
C'mon, you're smarter than that. It can easily be "fixed" at any time in the future with a payroll tax increase, which could be made much less regressive by coming mostly in the form of raising the income cap- already an Obama campaign promise, by the way.
February 23, 2009 11:12 AM | Reply | Permalink
sounds lees like wondering and more like fearmongering. perhaps just the inadvertent kind of fearmongering that comes from being the victim of the republican fearmongering campaigns, but fearmongering just the same.
truth is at this point we have more to fear from social security 'reform' than we do from doing nothing, much less just waiting and getting everything else sorted out FIRST.
February 23, 2009 11:30 AM | Reply | Permalink
Okay, this is the place the funny but snarky rejoinder I wrote was before I deleted it in the interest of fostering a more mature discussion.
I am at a loss to understand what the invocation of the magic words "Republican fearmongering" adds to this discussion.
I believe it is an acknowledged, real-world fact that the trust fund will enable us to pay full benefits for about thirty years, give or take. Conversely, I think it is also agreed that after the trust fund is exhausted, Social Security cannot pay more than seventy something percent from current payroll tax revenues if nothing changes. Do you dispute either of those facts?
If not, I cannot understand how mentioning these two facts in one breath and, blasphemy of blasphemies, hinting that we should do something to extend that thirty years out past the lifetimes of people now living is either accepting or spreading "Republican fearmongering."
Republican fearmongering, about which I have said much here over the last two years, comes in two flavors: the kind that demands insane remedies based on made-up facts and the kind that demands insane remedies based on real facts. I agree that we should reject both the factual basis and the insane remedies for the former kind.
However, if Democrats are not allowed to talk about real facts, much less, advocate rational actions to address real facts just because Republicans fearmonger over them, doesn't that mean we're pretty much being p'wned by the Republicans? Doesn't that mean that they're dictating our actions through fear and thus own our asses? Not necessarily the fear they want to produce but, rather, fear that attempting to address the real facts will somehow magically cause their insane remedy to be conjured into existence, our own majorities and vast mandate notwithstanding.
Doesn't that mean that they're basically forcing us to put real problems that we could truly fix with sane remedies into the deep freeze, where they will stay until they are back in power and can put their insane remedies for the problem into effect?
Just saying (to you and the other Steve) that if we're going to inject some progressivity into this most regressive of taxes by, say, doughnut holing in a second bracket for people making more than one or two hundred thousand, why isn't now the time to do it? When are we going to have a better opportunity than now? Possibly 2011 when we may have 60 votes in the Senate, but then again, we may have 53 if only slightly harsher than usual midterm shrinkage occurs.
My suggestion is that we should acknowledge a real problem that's relatively easy to fix with a traditional "liberal" remedy--progressive taxation--that the Republicans have somehow managed to demonize as Stalinist kooky-talk. Use the fact that Rebublicans have created an awareness of the problem and then fix it with our sane remedy rather than their crazy one, rather than closing our eyes real tight and going to our "safe place" whenever anyone mentions the words "fix" and "social security" in the same breath.
If we fix a relatively easy-to-fix problem that the Republicans have hyped as a looming apocolypse our way, we take one of their big pieces off the board and gain momentum will need to fix harder problems.
Yeah, now that I've said it, it does sound like giving in to Repbublican fearmongering, doesn't it? Guess we'd better just engage in a lot of avoidance and denial instead.
February 23, 2009 12:15 PM | Reply | Permalink
February 23, 2009 12:50 PM | Reply | Permalink
First thing we do is drop the phrase "entitlement spending"....
Obama will help by reinforcing the idea that Health Care is a Right, and not merely a privilege of citizenship.
February 23, 2009 11:20 AM | Reply | Permalink
You know I have heard that before and I don't think that it will sell that way. I think a better approach is that we are paying for it anyway in emergency rooms and poor health which increases the costs for all. Why not make it cheaper and more efficient in the long run? Also, it will help business. I think if he gets the chamber of commerce and major industries, what's left of them, on board to sell the plan, it will sell. Also, you have to play up that walmart is getting free healthcare by requiring their employees to sit in emergency rooms for care at a greater cost to the population.
I think there are alot of better ways to sell the reform, than labeling it a right. That will just get the opposition rolling and might derail the reform.
February 23, 2009 11:32 AM | Reply | Permalink