A Path to Meaningful Entitlement Reform

The national debt is rapidly approaching $20 trillion. The current federal budget deficit is nearly $600 billion. If the debt were apportioned equally, every man, woman, and child who is a citizen of the United States would owe $61,345, as of this writing. Those are simply the facts.

Here are other facts. The primary driver of the exploding national debt is so-called “mandatory spending”—in other words, entitlements. Medicare and Medicaid combined cost more than $1.1 trillion, while Social Security is over $925 billion annually. Defense spending, by contrast, totaled just under $600 billion in fiscal year 2015.

Yes, according to popular belief Social Security is supposedly a system where the government acts as a guardian of retirement funds, withdrawing those funds from a working person’s paycheck and returning the money years later to new retirees. But in reality, those funds were spent long ago. The government is funding Social Security benefits for current retirees with the tax revenue from current workers—and there are no longer enough new workers for the government to keep up the charade. The system truly is a Ponzi scheme of epic proportions, and sooner, rather than later, the system will come crashing down, absent significant reforms. If we continue following the present course, today’s workers cannot expect to see any Social Security benefits of their own, decades in the future. They (including myself) will have been, quite simply, stiffed.

Most Democrats—and many Republicans—don’t want to talk about the real reasons behind the massive national debt. Even many of the so-called “deficit hawks” prefer to nibble around the edges of the problem, going after government waste but unwilling to speak out strongly against the rapid growth of the entitlement state. If they truly want to get the debt and deficit under control, the answers lie within the reformation of the “Big Three”: Medicaid, Medicare, and Social Security.

To be perfectly honest, Social Security was a mistake. If I were a member of Congress in the 1930’s, I would have voted against it. But the fact of the matter is that in the decades since its enactment, millions of seniors have come to depend on it, and the program is now an integral part of the fabric of the nation. Like it or not, Social Security as a basic institution is here to stay.

But that doesn’t mean that significant reforms can’t be attempted, to make the program better and more financially sound. For starters, the Social Security retirement age, for full benefits, is either 66 or 67, depending on date of birth. When the program was first enacted, the retirement age was 65, and the average life expectancy was 62. Today, the average life expectancy is 79. A program originally intended to support senior citizens in the final few years of their lives now routinely serves to fund an increasingly active lifestyle for decades. For the program to remain solvent, the retirement age for full benefits must be raised to at least seventy (excluding, of course, those at or near the current retirement age).

Reducing—or eliminating entirely—Social Security benefits for high-income earners should also be seriously considered. Making millions of dollars over the course of your career is cause for celebration, but there is no reason for you to receive an additional check from the government every month.

And (again exempting current and soon-to-be retirees), the reduction of Social Security benefits for everyone should be an issue closely studied.

Medicaid and Medicare are also in need of substantial reform, particularly with regard to the current payment method of Medicaid benefits. A system of block grants to the states, which would allow for greater flexibility and innovation in existing state programs, would save money and reduce waste even if no cuts to benefits were considered.

It’s time for lawmakers in both parties to let go of their fear of the “Third Rail”, and challenge established wisdom regarding the entrenched entitlement state. The fiscal future—and national security—of the country depends on it.

Why Don't We Talk About Spending?

Remember when nearly all political debate centered around government spending? Everyone was talking about the national debt hitting $17 trillion. Thousands of people were in the street, and thousands more online, demanding an end to the stimulus and fundamental reforms to Medicare and Social Security before they went bankrupt. Fiscal cliffs and balanced budgets and sequestration were the talk of Washington.

And now? Any talk of reforming entitlements, apart from expanding them, is verboten. The GOP, supposedly the party of fiscal sanity and restraint, has nominated for president a man who considers Medicare and Social Security off limits entirely, and even Paul Ryan has seemingly given up his quest for meaningful entitlement reform for the time being. Proposals for a Balanced Budget Amendment, the center of debate just four years ago, suddenly seem antiquated and out of step with the times.

Meanwhile, the national debt has surpassed $19.5 trillion, the budget deficit is nearly $600 billion, and Social Security and Medicare are both expected to cease being able to fully pay for benefits within the next two decades—Medicare by 2028 and Social Security by 2034.

So why are so few people talking about the issue now, when the situation is if anything even more serious than it was four years ago?

Part of the reason is that so much has happened over those four years to shift the political conversation. Illegal immigration has surged, and President Obama in turn has introduced far-reaching and unconstitutional executive orders to legalize many of those immigrants. Gun control, too, has become a much greater issue, as has race relations and accountability in the law enforcement community. On the international stage, terrorist attacks around the world, coupled with the rise of ISIS, the continuing civil war in Syria, and the greater assertiveness of Putin’s Russia have all served to shift attention elsewhere.

But another important factor is that many Republican voters and Tea Party members—especially older voters, who have been the grassroots force behind many fiscally conservative proposals—have proven themselves to not, in fact, be especially conservative on such issues. This was proven most vividly during the primaries, when many such voters abandoned conservatives champions like Ted Cruz and Marco Rubio in favor of Trump, who didn’t even bother to pretend to be a fiscal conservative. Instead, he loudly promised to protect entitlements, Social Security, and Medicare for everyone, and condemned anyone who sought entitlement reform as hating the poor and elderly. A classic liberal argument—and many voters bought it.

Many of those same older voters never cared much for entitlement reform—at least not their entitlements. It was always easier to fight against the stimulus, against wasteful government programs that never directly affected them. But when it came time to discuss Social Security and Medicare, those topics were largely off the table for those voters, even when conservatives made clear that any restructurings would only affect future retirees, and were necessary for the programs to stay solvent.

Absent an energetic voting bloc that consistently pushed for broad-based entitlement reform, the novelty of cutting spending in Washington quickly wore off. There will always be support for eliminating waste and pork-barrel spending. But much of the national spending problem is driven by current and proposed entitlements—and despite any protests they might make to the contrary, many older Republican voters are just as opposed to reform as Democrats.