Spending (It’s For the Children)

For the children? Perhaps not. In the Washington Post, Robert Samuelson casts a skeptical eye on the current crop of presidential candidates and their promises to take care of the children.

Our children face a future of rising taxes, squeezed — and perhaps falling — public services and aging — perhaps deteriorating — public infrastructure (roads, sewers, transit systems). Today’s young workers and children are about to be engulfed by a massive income transfer from young to old that will perversely make it harder for them to afford their own children.

No major candidate of either party proposes to do much about this, even though the facts are well known.

Social Security, Medicare and Medicaid — three programs that go overwhelmingly to older Americans — already represent more than 40 percent of federal spending. A new report from the Congressional Budget Office projects that these programs could easily grow to about 70 percent of the budget by 2030. Without implausibly large deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today’s levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.

Just to make this easy, here’s the graph from the CBO [PDF] showing current and projected federal spending costs (click the image if you need to see it bigger):

That, right there, is the entitlement and spending crisis. Social Security costs will rise for the next two decades, and Medicaid and Medicare costs will shoot upwards for the foreseeable future. And yet all the Democratic presidential candidates not only refuse to address the current entitlement crisis, they want to add to it by putting even more people on government health-care rolls.

Some, like The American Prospect’s Dean Baker, suggest that the problem is merely cost containment. But since when has a government program ever been the best way to control costs? When was the last time a public program provided less wasteful, more efficient service than a private one? Moreover, why can’t cost-cutting be done through deregulation? Letting people individuals buy insurance across state lines would be a big first step here, as it would sheer away many of the restrictions currently in place on insurance companies and create a more competitive market.

The same is true of moving toward health savings accounts and catastrophic coverage, making the vast majority of individuals seeking care more responsible for what medical procedures are performed rather than the current system (or a government system) in which third-party payers incentivize the consumption of excess care.