Friday, July 29, 2011

Root Causes of the Ballooning Debt Crisis

Robert J. Samuelson, who I respect, but do not always agree with, reminded me of the fact that the political leaders refuse to talk openly about the real source of the debt problem. In an article partly titled "It's the Elderly, Stupid" he makes the case that source of the trouble is that over the last half century the changing social contract has made
". . .the federal government’s main task into transferring income from workers to retirees. In 1960, national defense was the government’s main job; it constituted 52 percent of federal outlays. In 2011 — even with two wars — it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.

These transfers have become so huge that, unless checked, they will sabotage America’s future."

Unfortunately, right now, there are no votes and zero leadership to start cuts to medicare and social security right now. If we are to stop borrowing, that would have to happen. I need to ask my fellow tea partyers whether we want to explicitly state that we have a goal of cutting social security payments immediately and whether we think that works politically. Samuelson goes on to state:
What he [Obama] hasn’t done is to ask — in language that is clear and comprehensible to ordinary people — whether many healthy, reasonably well-off seniors deserve all the subsidies they receive. That would be leadership. Obama is having none of it. But the shunning is bipartisan. Tea Party advocates broadly deplore government spending without acknowledging that most of it goes for popular Social Security and Medicare.
Is the critique correct? If so, what do we want to do about it? My answer is that entitlements must be means tested, if there costs are to be brought under control. The other part of the equation is the percentage of the population that is over 65, which is set to double by 2035. This has been taken as a given, but I think that if we set out to massively increase immigration of skilled younger workers, we can overcome that issue as well. Right now, I know of no one else advocating this position.

So how about it, fellow SLOBs and fellow tea partyers? What do you want to do about social security and medicare?

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