When it Comes to Entitlements the Kids are Not Alright

Let’s play a little game of word association. I say a politically-related program or person and you say the first thing that comes to mind. Ready?

Federal government. How about “inept”?

Barack Obama. Maybe, “overwhelmed”?

Entitlements. Definitely, “broken”?

As to the last word there is should be no question. The latest annual reports from the trustees of Medicare and Social Security were rife with ominous phrases like “trust fund reserve depletion,” “negative actuarial balance,” “unfunded obligation,” and “unsustainable path.” Not exactly words you’d come up with on the spot in a game of fast-paced word association, but nevertheless reveal a clearly negative direction for the programs, one that calls for a quick solution.

Unless, that is, you’re a liberal like Paul Krugman. Immediately after the trustees’ report was released Krugman took to his column to proclaim that “the geezers are all right” and that the case for entitlement reform was closed.

“[W]e can always count on the baby boomers to deliver disaster, can’t we? Doesn’t the rising tide of retirees mean that Social Security and Medicare are doomed unless we radically change those programs now now now?,” Krugman sarcastically asks. “Maybe not.”

Krugman goes on to argue that “even if nothing at all is done” to Social Security, the system will be able to pay most of its scheduled benefits.” And with Medicare, he ignores the fiscal reality altogether and instead focused on the singular positive found in the report, that health care costs have “flattened out significantly over the past few years,” thought he readily admits that “[n]obody is quite sure why.”

Smartly, Krugman eschews the use of numbers in his column, because frankly, they’re ugly. The trustees report projects that Social Security is running a long-term deficit of $231 trillion. That means beginning in 2033, at the time when the program’s trust fund has been depleted, Social Security recipients will only receive 77 percent of scheduled benefits.

Krugman seems very dismissive of this cut, brushing it off simply by saying that seniors will continue to receive “most” of their benefits. But something tells me that if Republicans stood up tomorrow and asked to cut Social Security by 23 percent – the same amount that will naturally occur without political action – that Krugman, and every other liberal worth their salt, would stand up, scream and argue that the GOP was out to kill seniors.

And Medicare is even worse. That program has a $42.99 trillion long-term deficit. Although Medicare has multiple trust funds, which complicates the calculus somewhat, the report projects that the hospital trust fund will be depleted in 2026, at which point Medicare could only pay doctors to the extent they are covered by payroll taxes. According to the trustees this would cause access to health care to “rapidly be curtailed,” meaning many seniors would not be able to find a doctor willing to accept Medicare and lead to much worse health outcomes.

In both cases the trustees clearly recognize the need to act sooner rather than later. “Implementing changes soon will allow more generations to share in the needed revenue increases or reductions in scheduled benefits,” Social Security’s trustees write. Medicare’s trustees’ concurred, urging that “consideration of such reforms should occur in the near future,” and pushing for Washington to “work closely together with a sense of urgency to address these challenges.”

So what do Democrats, prodded along by head-in-the-sand pundits like Krugman, do? Why they completely ignore the dire warnings of the trustees and take the reports as a sign that they can continue in their eternal procrastination of needed reforms! Of course…makes total sense. The Wall Street Journal reports:

“Shrinking near-term federal deficits, slowing health-care cost increases and partisan gridlock have all but wiped out the likelihood for a deal this year to reduce long-term U.S. deficits, perhaps delaying a compromise until after the 2014 midterm elections, White House officials and congressional lawmakers said.

. . . One senior Senate Democratic aide said the CBO and Medicare trustees’ reports undercut the impetus to tackle long-term deficits. “We need to do something about entitlements but it is not the existential crisis that it used to be,” he said. “It’s not that it [Medicare] doesn’t need fixing. It’s that we don’t need to do it this year.”

In other words, since the recession has temporarily slowed down the growth in health care costs, let’s indefinitely put off any opportunity for reform. Sure, that will mean sharper reductions in benefits once the trust funds run out, but hey, that sounds like a problem for future Congress’ to figure out.

So, back to our little word association game, when I say Democrats, did you think “unrealistic” or “cowardly”? Congratulations, just don’t expect Medicare benefits as your prize.