It’s Today: Obama’s Summit
Many Democrats (according to the New York Times) are upset that President Obama is even bringing up the issue of elderly entitlements. Will it do any good?
Let's start with the basics. We can begin by recognizing the problem – which too many Democrats (and even some health economists) have been denying for way too long. This may require an "intervention," and maybe even 12 step rehab. But there is no way we are going to get agreement on a solution, until we get agreement on the problem.
According to the Trustees, the unfunded liability in Social Security and Medicare is more than $100 trillion dollars (that's trillion, not billion), or about 6 ½ times the size of the entire US economy. That's the size of our commitments over and above expected premiums and dedicated taxes, measured in current dollars. [link]
Of this amount, Medicare accounts for about $85 trillion. Note that Medicaid is almost as large as Medicare and two thirds of that is a federal obligation. Furthermore, our options are very limited. Even if we decided to close down Social Security and Medicare tomorrow, collecting no more payroll taxes and allowing no more benefit accruals, we still owe about $52 trillion in benefits that have already been earned. [link]
If we stay on the current course, these programs will crowd out every other federal program over time. Social Security and Medicare already have a combined cash flow deficit, which is being covered with general income tax dollars. By 2012, they will require one in every ten income tax dollars. By 2020, one in four. By 2030, one in two. [link]
So step one of our twelve step recovery requires us to ignore Paul Krugman and the editorial page editors of the New York Times and repeat in unison: we have a very, very serious problem.
Step two is to get a copy of my Medicare reform plan and read it.
I don’t understand why the left is in such denial about elderly entitlements. Is there some ideological connection between a belief in government and a belief in ponzi schemes?
I agree with you about the New York Times. But I’m not sure that even 12 step rehab will be enough to straighten them out.
Every agency of government that has looked at this question has come to the same conclusion — we are on an unsustainable course. The politicins are in denial.
I think we need to start with the president. Obama needs to do what George Bush never did. Admit that there is a $100 trillion unfunded liability. Admit that the deficit in entitlement programs will grow and crowd out everything else the government is doing. Call for radical reform.
Then and only then will we stop arguing about whether there is a problem and get on with the necessary changes.
The liberals are afraid the summit will lead to a bipartisan consensus, which might lock the United States into a “path of austerity” according to an article that ran in The Hill. Unfortunately, I suspect they have little reason to worry.
http://thehill.com/leading-the-news/liberals-worried-over-obama-fiscal-summit-2009-02-19.html
Did you notice that Larry Summers fell asleep at the meeting? There must be something significant about that.
Hey Leftist-Progressives (i.e. Democrats, mostly),
Da' Nile aint just a river in Egypt.
Also, hyperinflation ain't just something that happens in Weimar Germany and modern Zimbabwe.
The Titanic is taking on water, and our politicians keep rearranging the deck furniture.
[…] have previously reported on Medicare's unfunded liability and ways to reform Medicare. This is from J.D. Foster's Medicare backgrounder for […]