The voices of Tax Policy Center's researchers and staff
Here in Washington you can feel it in the air: We are about to have one of our periodic donnybrooks over deficit reduction. And, Washington being Washington, the antagonists are already choosing sides. The White House drops broad hints that its upcoming budget will include some first steps towards much-needed budget-cutting. Republicans are trying to say, at once, don’t mess with Medicare, our new cause célèbre; don’t dare raise taxes; and—by the way—you should be ashamed of the debt you are leaving our children. Interesting bit of triangulation.
But the left is no better. In some precincts, liberals are already circling the wagons against any form of entitlement reform, which is to say changing Medicare, Medicaid, and Social Security. For instance, the National Commission for the Preservation of Social Security and Medicare is opposed both to a commission on broad entitlement reform and a separate advisory panel that would suggest ways to contain Medicare costs. Blogger Dean Baker says the entitlement commission “is Washingtonspeak for cutting Social Security and Medicare.”
I’ve already expressed my own skepticism about the entitlement commission--mostly because it will probably be unworkable. But the left’s knee-jerk opposition to almost any entitlement reform is myopic and couterproductive.
Here why: Medicare, Medicaid and Social Security are, in fact, eating the federal budget. Medicaid is also putting enormous pressure on state budgets. According to CBO, in just a decade the feds are likely to be spending 11.5 percent of GDP on just these 3 programs. They will be spending another 4 percent (or nearly $1 trillion) on interest on the debt. Under one likely fiscal path, tax revenues will be only 19 percent of GDP. That leaves just 3.5 percent of GDP for all the rest of government--including programs that should matter to the left such as education, environmental protection, food stamps, job training, and the like. Former senior Clinton Administration budget aide Belle Sawhill has worried about this squeeze for years, and some progressives are listening. But most just can’t hear.
Instead, it is easier for liberals to blame those wildly generous tax cuts enacted over the past decade for our deficit mess. They are not entirely wrong, and taxes surely will have to be raised as part of any budget deal. But the full weight of deficit reduction can’t possibly fall only on revenues. Does anyone really expect even President Obama and a Democratic Congress to hike taxes by the 4 percent or more of GDP ($500 billion-plus annually in today’s dollars) it would take to support both projected entitlement growth and other domestic spending?
The left also needs to rethink the view that more, and more expensive, medical treatment automatically yields better health. The evidence is overwhelming that it often does not. We can argue about whether Americans are entitled to good medical care. But it hard to argue they are entitled to the most expensive medical care, even in the absence of evidence it will make them better. If we do it right, we can cut Medicare without doing harm. Similarly, reforming Social Security does not mean cutting promised benefits for those who most need them. It may mean giving the wealthy different retirement options than they have today.
For years, TPC’s Gene Steuerle has argued passionately that unthinking spending on Baby Boomer entitlements will result in a massive transfer of resources to the Boomers at the expense of both children and the very old—another price I’d think the left should be reluctant to pay. The most important step progressives can take now is to get in the deficit reduction game, and not just stand outside and say, “no” as conservatives have done with health care.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.