Of all the great challenges that face the next president of the United States, none is more politically daunting than entitlement reform.
Social Security, Medicare and Medicaid account for about 42 percent of all federal spending, and the country’s baby boomers haven’t started retiring yet. Medicare is already paying out more in claims than its taxes bring in, and its reserves will be exhausted within a decade. About the same time, Social Security’s obligations will exceed its collections. Assuming Congress repays the trillions of dollars in Social Security withholdings it has borrowed, reserves will be gone by about 2040.
But right now, Washington is wholly uninterested in making good on taxpayer liabilities. The capital is addicted to deficit spending despite record revenue collections. The national debt just topped $9 trillion — child’s play compared with the more than $38 trillion in unfunded benefits promised to the country’s senior citizens over the next 75 years.
In 40 years, these entitlements, without reform, are in line to consume the entire federal budget, leaving no money for defense, law enforcement or the three branches of government, let alone welfare programs or infrastructure.
For Republicans and Democrats, forever preoccupied with their own re-election campaigns, the options aren’t favorable: tax increases large enough to threaten the economy, benefit cuts, lifetime benefit caps, eligibility restrictions, overall spending reductions or some kind of privatization — or a combination of all six. Every choice is an affront to either party’s base constituencies, and worse, each alternative requires politicians to ponder the future and the crippling tax burdens that await their grandchildren.
“Those in power are thinking only for today,” said U.S. Comptroller General David Walker, who heads the Government Accountability Office. “They have a ‘flat earth’ theory on budgeting. After about 10 years, everything falls off.”
Mr. Walker is on a mission: to alert taxpayers to the coming fiscal tsunami that will wipe out the American economy if nothing is done to make federal entitlements — and the federal government — sustainable through the 21st century. He’s convinced such reforms are possible as long as voters unite in demanding a solution and the president uses the bully pulpit of the White House to craft a bipartisan solution.
Mr. Walker leads the Fiscal Wake-Up Tour, organized by the nonprofit Concord Coalition in collaboration with the conservative Heritage Foundation and the liberal Brookings Institution. The band of budget hawks has ideas about how to best fix the problem, starting with massive health-care system reforms and some of the options listed above. But in a meeting with the Review-Journal’s editorial board Wednesday, all of its members agreed that it can be accomplished only through bipartisanship and consideration of every possible policy choice.
Those criteria would appear to make solutions impossible, based on the toxic political climate in Washington and the rhetoric of the leading 2008 presidential candidates.
Sen. Hillary Clinton, the Democratic front-runner, reiterated earlier this month that she won’t support personal accounts, benefit cuts or raising the retirement age for Social Security beneficiaries, and that “putting everything on the table is not an answer.” Which means taxpayers can count on more inaction on entitlement reform if she’s elected president.
Democratic Sen. Barack Obama has said that “everything should be on the table” except allowing citizens to invest a portion of their Social Security withholdings in personal accounts.
Democrat John Edwards said he’s committed to finding a bipartisan solution, with fixes to Medicare being a higher priority than Social Security. He wants to establish a working group to study possible reforms — just like every other president over the past three decades.
Republicans Rudy Giuliani and Mitt Romney have offered no platforms for entitlement reform.
Only Republican Fred Thompson, the newcomer to the race, has pledged to make entitlement reform a cornerstone of his campaign. As a Tennessee senator in 1999, he co-sponsored a bipartisan bill to partially privatize Social Security, among other reforms. He voted to means-test Medicare benefits. And, in a risky move for a GOP candidate, he has so far refused to rule out tax increases as part of the solution. But earlier this month, when asked how his previous support of personal Social Security accounts differed from President Bush’s recent failed proposal to do the same, he responded, “I don’t even remember the details of his plan.” Hmmm.
Six candidates. Zero specifics.
Nevada has a chance to shape this debate over the coming year. When these candidates visit the state to raise money and court endorsements in advance of Nevada’s Jan. 19 caucuses, voters should ask them to articulate their positions on entitlement reform. The 40-and-under set in particular should be leading the populist charge on this issue.