Bush’s Budget Moves Have Made the Future a Voiceless Victim
It may be difficult to believe, but as the debate on Social Security begins, what Washington needs most is another lobbying group. This one would advocate for the interests of Americans not yet born.
Concern for future generations has been scarce in the capital’s recent fiscal decisions. First, President Bush muscled through Congress a series of massive tax cuts that showered benefits on today’s taxpayers but left future taxpayers the prospect of unending federal budget deficits. Then, after a bidding war between the two parties, Congress approved and Bush signed an expensive new prescription drug benefit for seniors.
Over the next 75 years, the best estimate is that Bush’s tax cuts will cost from $10 trillion to $12 trillion. The prescription drug bill will cost about $8 trillion. All this comes while bills mount for the global war against terrorism. In essence, we’ve voted ourselves more services and lower taxes and billed both to our children through a higher national debt that is soaring again after shrinking in the late 1990s.
The combined cost of the tax cut and prescription drug benefit is about five times larger than the projected gap between Social Security’s revenue and its promised benefits over the next 75 years. Yet Washington has decided that the Social Security shortfall is the real crisis. So the administration is discussing changes that would sharply reduce guaranteed Social Security benefits for young workers while protecting benefits for those at or near retirement today.
Bush would allow young workers to offset some of the benefit reductions loss by diverting part of their payroll taxes into private accounts they could invest in stocks and bonds. But there’s a hard pit even in that cherry: The accounts would be funded with trillions of dollars in additional debt.
One economist has calculated that adding that much borrowing to the annual budget deficits already projected could produce a publicly held national debt by 2030 almost as big as the country’s gross domestic product. The only time America has left future taxpayers a debt that large was during World War II, when the U.S. fought in the planet’s most destructive conflict.
Workers facing higher taxes to pay the crushing interest on the national debt in 2030 might not consider our justification for burying them with bills quite as compelling.
Remember the first “Terminator” movie, where the future sent back Arnold Schwarzenegger to make war on the present? These budget choices amount to the reverse: a war by the present against the future.
“The most unifying characteristic of fiscal policy in recent years has been an unwillingness to impose any pain on anyone who currently can vote, while imposing tons of pain on people who are not yet born or can’t yet vote,” said Peter R. Orszag, an economist at the Brookings Institution.
Hey, you, on the couch watching Jon Stewart: Are you listening?
Maybe this will get your attention: As bad as the budget is now for your generation, it gets worse as the baby boom retires. Much worse.
As society ages, Social Security’s cost, measured as a percentage of the overall economy, will jump by about 50% through 2050, the Congressional Budget Office estimates. Spending on Medicare and Medicaid (which funds long-term care for poor seniors) will grow much more rapidly because higher medical costs will compound the effect of more retirees.
Not long ago, the CBO produced three long-term federal budget projections that reflected varying levels of optimism about controlling healthcare costs. Today, Social Security, Medicare and Medicaid consume just over two-fifths of federal spending apart from interest on the debt. Under the most optimistic scenario, that rose to three-fourths by 2050; under the least optimistic, the three programs soaked up nearly 85% of noninterest federal spending.
Either way, that doesn’t leave much for anything else the government might want to fund over the next half-century, like defending the country -- much less investing in education, science or transportation.
Something has to give. Democrats now piously denouncing any cuts in retirement programs eventually must recognize that resisting all benefit reductions in Social Security and (especially) Medicare will leave the government without the money to fund the other things they care about.
“The runaway growth of automatic spending programs for elderly Americans will squeeze out funding for programs for family and children if we do nothing to change our course,” said Will Marshall, president of the Progressive Policy Institute, a centrist think tank.
Republicans must acknowledge that it is unreasonable to cut taxes if the only way to fund them is by billing the next generation through an increased national debt.
The unsustainable projected increases in spending for Medicare, Medicaid and Social Security will force future generations to scale back their own benefits -- and almost certainly raise their taxes. That’s unfortunate, but probably unavoidable. The least future generations can expect is that we not multiply their problems by saddling them with massive debts so we can spend more than we’re willing to pay today.
An agenda built on equity for the future would spread sacrifice across the parties, and the generations. Democrats would need to accept reasonable retrenchments in programs for the elderly that would reduce the pressure for catastrophic cuts later. Republicans would have to roll back tax cuts that are contributing to debilitating debts.
The approaching firefight over restructuring Social Security might be a good place to begin framing such a grand bargain; a plan centered on generational fairness might combine reasonable benefit reductions, some investment option, more revenue and a commitment to avoid new debt. Seniors and Wall Street already have their champions in the debate. Is there anyone who will speak for the future?
Ronald Brownstein’s column appears every Monday. See past Brownstein columns on The Times’ website at latimes.com/brownstein.