Entitlement Reform Must be on the Table
Facing the looming fiscal cliff yet again, entitlement spending must be on the table. Democrats freely accuse their Republican counterparts of having their sacred cows in the form of defense spending and tax cuts on the “wealthy,” while balking at anything resembling cuts to entitlement spending. If only the Obama of today agreed with the Obama of 2009 who said, “you don’t raise taxes in the middle of a recession… because that would suck up, take up more demand out of the economy and put businesses in a further hole.”
Republicans have alluded to a softened stance on revenue, as long as entitlement spending is included in negotiations. Inability to strike a deal results in sequestration across the board, as agreed to in the last debt ceiling debacle. Sequestration wasn’t meant to be fiscal policy but was intended to be a failsafe ensuring the success of future negotiations, but it may be the only way to force Democrats in to budget cuts.
If what Obama advisor, David Plouffe says is true, there may yet be hope. Buzzfeed reports:
“What we also want to do is engage in a process of tax reform that would ultimately produce lower rates, even potentially for the wealthiest,” he said, referring to benefits from corporate tax reform.
Plouffe added that while the White House wants to engage in comprehensive tax reform, they know they must also “carefully” address the “chief drivers of our deficit”: Medicare and Medicaid.
While it’s encouraging that the White House may be open to Medicare and Medicaid reform, Jay Carney made it quite clear the President has no interest in addressing Social Security, according to CBS News:
White House spokesman Jay Carney said today that Social Security is one entitlement program that should be addressed on a “separate track.”
“We should address the drivers of the deficit and Social Security currently is not a driver of the deficit,” Carney told reporters today. The senior retirement program is solvent for another 21 years, at which time recipients could see a reduction in benefits.
Twenty-one years until Social Security is insolvent yet the Obama administration refuses to make entitlement reform a priority. Social Security is America’s second largest budget expenditure, and in conjunction with Medicare, eats up approximately one third of the total budget. Budget talks that do not include Social Security reform cannot honestly profess to be serious budgetary discussions.
In their Summary of 2012 Annual Reports, the Social Security Medicare Board of trustees implore Congress to take legislative action to reform entitlement benefits. “Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers,” the report states. The report also indicates:
Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare. If they take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.
Yet, Democrats prefer to ignore the long term consequences of avoiding reform in exchange for short-term political gains. An incredibly concerning article published in the Wall Street Journal breaks down the actual cost of entitlements:
The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
Why haven’t Americans heard about the titanic $86.8 trillion liability from these programs? One reason: The actual figures do not appear in black and white on any balance sheet.
This “fiscal cliff” is much steeper than most realize and is more accurately — a fiscal abyss. While Washington plays political and rhetorical games, math dictates that no amount of taxation, or “revenue” as the left has taken to calling taxes these days, will be enough to put a dent in America’s staggering debt. Regardless of the petty deal lawmakers reach in the coming months, without serious entitlement reform, America will go careening over the fiscal cliff.
