‘We’re going to have to take on entitlements, and I think we’ve got to do it quickly. We’re going to have a lot of work to do, so I can’t guarantee that we’re going to do it in the next two years, but I’d like to do it in my first term as president.”
That was candidate Barack Obama back in October of 2008, responding to a question from Tom Brokaw about how soon Obama would, if elected, move to reform entitlement programs, which Brokaw described as “a big ticking time bomb that will eat us up maybe even more than the mortgage crisis.” (Funny how this sense of urgency has all but evaporated in the mainstream media.)
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So, with a little over a year left in Obama’s first term, how’s it going? One need look no further than the Standard and Poor’s report explaining its decision to downgrade the United States’ credit rating. The ratings agency describes the recent debt-ceiling deal approved by Congress as insufficient because “the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.” Which is basically a polite way of saying “big ticking time bomb.”
Throughout the debt-ceiling debate, Obama insisted that he was willing to “put everything on the table” and “get serious” about entitlement spending, and claimed to have offered $650 billion in savings over ten years. He’s talked vaguely about raising the retirement age and mean-testing benefits. But all this would have been more convincing, however, if he had bothered to put forward a plan in writing. House Speaker John Boehner (R., Ohio) cited the fact that Obama was “adamant that we cannot make fundamental changes to our entitlement programs” as a primary reason for his decision to abandon “grand bargain” talks with the White House.
Apparently, Obama still isn’t willing to make the needed changes, at least judging from his remarks on August 8 to address the S&P downgrade.“I intend to present my own recommendations over the coming weeks on how we should proceed,” the president assured us. It will include two major items: 1) tax increases, and 2) “modest adjustments to health-care programs like Medicare.” S&P downgraded the U.S. because all Washington made were “minor changes” during the debt-ceiling debate; apparently, Obama thinks “moderate adjustments” will get us back on track.
It’s not as if Obama hasn’t talked a serious game on entitlements before. In an unusually candid press conference on July 11, the president appeared to scold congressional Democrats for their unwillingness to confront entitlement spending. “The vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements; would prefer, frankly, not to have to do anything on some of these debt and deficit problems,” he said. “And what I’ve tried to explain to them is, number one, if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”
Indeed, many Democrats like to argue that they have already gone a long way toward saving our entitlement problem by passing Obamacare, which includes about $500 billion in Medicare “savings.” But this claim is patently belied by the most recent Medicare trustees report, which predicts that the Medicare trust fund will run out of money in 2024, five years earlier than forecasted in last year’s report. Not only that, but the revised forecast is based on a number of “implausible expectation[s],” in the words of Medicare chief actuary Richard Foster, many of them enshrined in the new health-care law. Medicare “as we know it,” the trustees confirm, will end unless dramatic reforms are enacted to bring down costs.
The won has lost the national conversation and the reality. He dithers trying to see what political advantage he can extract from the ineluctable tide that like King Canute he commands to obey.
Warren Buffett: "I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation."
@MikeB: Ronald Reagan: "There you go again". Your post ignores the $1.9 TRILLION in additional national debt(plus the authorization for $1.7 more), the thousands of new regulations on businesses and ObamaCare which will take the US ever to the brink. It's the spending...not the lack of tax revenue.
That Buffett quote might hold water for low risk, predictable outcomes that generally make up most of the profile of Buffett's investment horizon.
But innovation based job creation with higher risk profiles and longer return timeframes requires more than the incentive of just not being taxed to death.
The prospect of the government shifting the entire economic risk onto entrepreneurs by taking an 'option' on taxes where no concessions are provided for the positive outcome of risky ventures sees business sitting on its hands and cash.
Similarly the lack of Government fiscal discipline does not encourage consumer spending because that instability threatens economic stability and job security, therefore people save their money.
Government profligacy and irresponsibility does not inspire the same in a wary public.
Spending $5000b with nothing to show for it but a bigger government payroll might help arrest employment figures for a while but it does not produce wealth. Borrowing to do this just delays the inevitable.
As someone who as had reasonable conversations with you in the past (recall our mutual positions on most Sowell articles), am I to understand from you post that the preferred progressive plan on funding Medicare is to just keep raising taxes?
I'll paraphrase Mr. Buffett for you; "I am already crazy rich, worth multiple billions. I could care less if income or capital gains were taxed to high heaven. What do I care? Ha, ha, ha, ha, ha...I'll just say some dumb stuff to cement my good guy, philanthropic legacy!!!"
With that in mind, I would suggest you believe JohntyD.
Most of the waste and fraud in entitlements has to do with government eating 60-70% of every dollar that funds those programs BEFORE any eligible recipient - or, in the case of health care, provider - receives benefit or payment.
The UMMC spends more than 70% of every dollar it receives before paying any provider for services rendered to an eligible recipient. At the same time, PPACA mandates that private insurers spend 80% of all revenues on patient care. The private industry is meeting that mandate, paying providers fairly and making a profit, too. We should expect a centrally managed government program to realize economies of scale that allow it to be MORE efficient than a private program, not less.
Our government IS the problem. They need to be reigned in, enough that we don't have to rely upon trust in a legislator's discretion. These programs need to be reorganized until they are services for the citizens rather than rackets for politicians.
As James Madison made clear, there is no authority under the Constitution for the federal government to tax some people and give the money to others. The Founders understood that if that sound rule were broken, however appealing it would seem in particular instances, the floodgates would eventually be open to unlimited federal transfers and promises of tranfers. They knew that once a country starts to deviate from a sound general rule, just as much as when an individual does, it leads to long-run disaster.
Breaking that rule was one of our greatest national blunders.
He'd be sitting pretty with a plausible 10 year federal balance sheet if back in 2009 he had 1) raised eligibility ages, 2) cut cost of living increases and 3) avoided lunatic wars, and 4.0 cut our militrary empire.
The democrats controlled congress, and he was the mesiah. But he blew the chance.
His rhetoric is/was only about that quaint type of promise--an election promise. I.E., made by a politician who is trying to win an election. The public believed him....more fault lies with the dumbed-down masses and the hired help, aka the mainstreammedia, than with the shrewd, cunning politician.
An election promise is a promise made by a politician eager to get elected. Whether it's made under the banner of 'entitlements' or 'tax reform' or 'a chicken in every pot' - the gullible public is more to be pitied than the shrewd or cunning politician is to be hammered on it. Having the hired help, aka the mainstreammedia, on your side definitely helps to legitimize the election promise.
An election promise is a promise made by a politician eager to get elected. Whether it's made under the banner of 'entitlements' or 'tax reform' or 'a chicken in every pot' - the gullible public is more to be pitied than the shrewd or cunning politician is to be hammered on it. Having the hired help, aka the mainstreammedia, on your side definitely helps to legitimize the election promise. None of this president's 'promises' hold up. The only promise he made and that he kept was the revamping/trashing of the US healthcare system. His focus on destroying it was a promise he made to himself and his mother as he witnessed her many frustrating conversations with insurance bureaucrats.
NASA is not an entitlement program, but I'd gladly give up whatever good has come from NASA if we could escape from the prodigious harm that has been done by all of the welfare state. The Hubble Space Telescope has no doubt helped to advance our understanding of the cosmos. If we had to wait for private funding, we might not accomplish something like it for several decades. (Although perhaps not; reliance on government to fund science tends to deter voluntary efforts, just as government entitlement programs do.) That would be unfortunate, but compared with the economic and social damage that has been caused by the welfare state, that delay in scientific knowledge seems like, well, one star among billions and billions.
Well, George, one man's psychic pleasure in viewing the cosmos is another man's psychic pleasure in seeing people not lining up for food but instead getting it by sliding their EBT cards through a credit card machine.
Believe me, there is no bigger fan of space exploration than yours truly. But there's also something to be said about living in a country whose motto isn't, "Daniel Boone did it -- you can shoot your own food too. Tough!"
Funny how you kinda acknowledge that everything outside of the enumerated powers contained in Article I, Section 8 is . . . outside the enumerated powers. That means moving the Statue of Liberty off Bedloe's Island, transferring national parks to the states or maybe to corporations, closing down NIH, folding the Air Force back into the Army or getting rid of it . . . .
As best I can tell, Mike B is trying to argue that if we don't have federal welfare programs, the result would be widespread hunger. Nonsense. Before the era of the welfare state, the US was a much less wealthy nation, but there was a tremendous network of voluntary associations that gave assistance to those who were in need. There is an abundant literature on that and a good place to start is Professor David Beito's book From Mutual Aid to the Welfare State.
Government welfare is a bad solution to a real problem, one that voluntary action can handle without setting in motion the destructive effects of the entitlement mentality and political Ponzi Schemes.
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