The Corner

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RE: Examining Entitlements


Ramesh, I agree with your assessment of the very interesting debate about entitlements and deficits over at the Examiner. But I would stress one point. I think Byron York is right to argue that entitlements are not the foremost cause of our current deficit, but to say they are a long-term problem while reversing the massive growth of discretionary spending is the immediate problem strikes me as a version of the mistake politicians in both parties have made regarding entitlements for years: “future” and “long term” are not the same thing. Our entitlement problem, and especially the growth of our health-care entitlements, is the foremost cause of the terrifying debt projections that have had so much to do with putting fiscal restraint front and center in our politics lately. That entitlement explosion was a long-term problem in the 80s and 90s, and it should have been addressed back then—when doing so would have been much easier. It is now at best a medium-term problem, but really it’s a pretty immediate one. The baby boomers are retiring, health-inflation is out of control, and Medicare and Medicaid costs are in the midst of a massive explosion that will not stop for decades unless the programs (and especially Medicare) are fundamentally reformed soon. The politics of Medicare reform (in which current retirees almost have to be left alone) means that any change that could prevent disaster but would have some chance of passage has to be enacted in the next few years.
The politics of addressing our current deficits—those caused by out-of-control discretionary spending—is the kind of fiscal politics we’re used to: an argument about whether to address the imbalance between revenue and spending through spending cuts or tax increases or some combination. The scale of the problem is larger than usual, but the nature of it is not that unusual. The politics of addressing our entitlement-driven debt disaster will be very different—the scale of the problem is utterly unprecedented, and the nature of the policy reforms required to deal with it will pose a huge problem to our political system. The fiscal disaster of Medicare means that the future of our fiscal debates, including the fairly near future, just doesn’t look like the past. Here’s how CBO sees the past 40 years and the next 40 years in terms of the scale and makeup of government spending, in the absence of entitlement reform:
It is crucial that Republicans take up that challenge in a way that would make it possible to take some meaningful steps toward reform after the 2012 election. The Ryan budget was a very important first step on that path, but it is absolutely essential that the Republican presidential candidate next year is willing to make a case for some real reforms—be they Ryan’s or others. That doesn’t mean he has to run on a Medicare platform, but he has to include Medicare reform in his broader platform and rhetoric, and to be reasonably well prepared to make the case for it against the inevitable Democratic demagoguery. A failure to do so would be a failure to take our fiscal problems seriously. We do not face a choice between discretionary cuts and entitlement reform, we face a choice between doing both or suffering a massive debt crisis that will crush our potential for prosperity.