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Entitlement Reform and the GOP: Goodbye to All That?
Not much talk about the national debt during this GOP primary season. Oh, there’s the obligatory — passing — reference to it during speeches and debates, but little more. Indeed, GOP tax plans would make the debt much worse by trillions over the next decade and beyond.
Now maybe one reason there’s less debt talk is that budget deficits are way down, and the long-term fiscal outlook improved. On the latter front, the WSJ’s Grep Ip highlights a new study — co-authored by former CBO boss Doug Elmendorf — that forecasts the US debt-GDP ratio won’t hit 100 percent until 2032 vs. the CBO’s 2009 forecast of 2023. (Thank low interest rates and slower healthcare inflation for that.)
But maybe another reason Republicans aren’t talking about the debt is that it’s hard to do so without also talking about deep Medicare and Social Security reform. And while entitlement reform was a pretty hot topic early in the Obama presidency, passion on the right has waned. Reforming entitlements is out, defending them is in. As Donald Trump has put it: “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want [it] to be cut.” Here’s WSJ columnist Holman Jenkins:
Mr. Trump is a political harbinger here of a new strand of populist Republicanism, largely empowered by ObamaCare, in which the “conservative” position is to defend the existing entitlement programs from a perceived threat posed by a new-style Obama coalition of handout seekers that includes the chronically unemployed, students, immigrants, minorities and women.
This political rationale was emerging in the 2012 Obama- Mitt Romney race, though not yet fully formed. It surfaced again in the 2013 tea party fight over the debt limit, a Kabuki play that allegedly threatened national default. The Kabuki was driven, recall, by the demand of Mr. Cruz and other tea party types that ObamaCare be “defunded.” … The tea party animus toward ObamaCare is something different: Implicitly, such means-tested new entitlements that benefit working-age folks and people (read minorities) who typically vote Democrat are viewed as a threat to the traditional, universal, “earned,” middle-class retirement programs of Social Security and Medicare. … The unspoken tea party stance of defending the good old-fashioned entitlements of “real” Americans is increasingly, in dog-whistle terms, what differentiates one Republican from another.
Chris Christie, who went nowhere in Iowa, did himself no favor by dragging Social Security and Medicare into every debate, however much those programs need to be addressed. Marco Rubio was just as quick to modify any implication that Republicans therefore are entitlement reformers: “We are talking about reforms for future generations. Nothing has to change for current beneficiaries. My mother is on Medicare and Social Security. I’m against anything that’s bad for my mother.” Welcome to an important new fault line in our slow-growth, resource-constrained America. Though many of us believe the entitlement programs need to be reformed, success will come increasingly to Republicans who pose as “conservative” defenders of Social Security and Medicare.
In other words, government checks going to more likely GOP voters are “earned benefits,” those to Democratic voters, “welfare.” Medicare and Social Security good, Medicaid, Obamacare and income supports bad. Or as Jenkins phrased it in an earlier column: “The new ‘conservative’ position will be to defend Social Security and Medicare, those middle-class rewards for a life of hard work and tax-paying, against Mr. Obama’s vast expansion of the means-tested welfare state for working-age Americans.” Certainly not every Republican is totally buying into this. Rubio, for instance, does support sweeping Med-SocSec reform — though I don’t know how much he talks about it on the presidential campaign trail.
A few economic policy notes: First, the future projected cost growth of middle-class entitlements will need to be reduced.
Second, a GOP Obamacare replacement plan may not spend as much as Obamacare is projected to, but it will spend more than than a return to the pre-Obamacare status quo. The 2017 Project has devised an ObamaCare alternative that would include refundable tax credits for individuals and the uninsured to buy private health insurance. The proposal would cost about a trillion bucks over ten years.
Third, the globalized, technologically advanced US economy might require a broader array of income supports than many GOPers now consider wise. AEI’s Charles Murray, a supporter of a government-guaranteed basic income — has argued thusly: “Massive government redistribution is an inevitable feature of advanced postindustrial societies.”
Published in Economics
This is depressing.
That makes me think of Philip Jose Farmer’s dystopian novella Riders of the Purple Wage.
By the way, how much of that “slower health care inflation” is due to higher deductibles? They are a disincentive for “discretionary” spending on office visits; ER visits and hospitalizations tend to eat up all or most of the deductibles and get done regardless.
We don’t know yet what the long term health consequences of that will be.
Beyond Trump, there’s the helpful element that a big part of conservative media now considers immigration the litmus test and calls Paul Ryan the “GOPe.”
Ryan and his plans were a joke in 2011. Its not like this is new.
Rubio talks about it as a core part of his message. Watch more or less any of his stump speeches and it’s there. With the betting markets making him the strong leader for the nomination, I don’t think that there’s been a primary that supported it more clearly say this point. What election is James comparing it to?
Why yes. Let’s join centrist and right-wing Democrats in supporting compensated social exclusion! That has just worked so well for the Democrats electorally, hasn’t it? Why, the Dem’s lead in the working classes has only widened since they adopted that position in the late 2000s.
Yes, let’s join the other party in applying the carrot and the stick indiscriminately and simultaneously!
I knew I’d see you here – I know this is a concern for you (and I join you in this!)
I would rank getting our spending under control over getting immigration under control. However, I’m also v. concerned about importing millions of lower income workers, who’ll have a claim to our social programs (including SS and Medicare/caid) quickening the days these programs will completely break down.
10 million illegal immigrants, 1 million legal immigrants a year.
55 million people already on Social Security and 75 million Baby Boomers with their hands out wanting “their money” over the next 20 years.
Maybe I forgot arithmetic when I learned calculus, but I’m pretty sure the immigrants (legal or illegal) aren’t going to have much impact either way.
Lady, I work with money for a living. Its a big deal, trust me.
And I doubt the number of illegals in this country is as low as 10 million.
And its not just SS and health insurance. Its also EBT, Earned Income Tax Credits, Child Care Tax Credits, subsidized education, subsidized housing of one variety or another, and numerous other programs we’re not fully aware of. All these programs will add up quickly.
It’s real money, and people have to work hard to earn it. I reject this cavalier attitude about spending it.
Here’s the problem … SS/Medicare/caid are 50% of total government outlays. All other wealth transfer/government assistance programs are 19%. Education is 3%. And again, this is before the tsunami of Baby Boomers can start collecting. Anyone who thinks we can somehow balance our books by stopping spending on illegals is refusing to face the elephant in the room.
Welfare for old people will be cut. It’s just a question of who, how much, and how soon.
Sorry, where did I argue that we can ‘balance the books’ by eliminating immigration? I think you put words in my mouth.
I agreed with Leigh that entitlement reform (government spending overall) is a concern above illegal immigration, but that we cannot ignore that allowing millions to enter who’ll have a claim on these systems will burden these systems further. I cannot be as cavalier about the $ as you.
How do you justify cutting off Americans but shrug at the idea of new (illegal) arrivals signing up for benefits at the same time? Seems perverse.
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
Charles Dickens, David Copperfield, 1849
I don’t want them signing up for benefits. And frankly, since illegals collecting benefits is itself illegal, I think any government worker who approves an application from an illegal should be lose their job and if possible prosecuted for fraud.
I’m just saying that in the end, immigrants just aren’t that important. They may manage to be the straw that breaks the camel’s back — I won’t deny that. But the camel is already overloaded and is going to break without that straw eventually.
The Greenspan Commission report that exposed Social Security for the unstable Ponzi scheme it is came out in 1983 — a couple months before I was born. I feel like that should be enough notice.
That would be nice. Job and pension. Ain’t gonna happen.
That sounds like someone saying that “Since I’m already broke, there’s no reason not to buy more stuff on credit.” It also omits the pernicious political and economic effect of people who are government clients, contractors and direct or indirect employees being a majority of the population.
The government has confirmed that upon legalization, they will be eligible for all benefits any legal immigrant has access to – which is to say, almost all of them. That’s the reality. I’d have less problem with loose immigration with a greatly reduced welfare and entitlement system. But our government seems to have even less will to lower entitlement/welfare spending than they have to control immigration.
We have a lot of hard choices to make, but people don’t want to hear it. I wish our politicians would talk about the real risks of not fixing this.
There is an entire industry built on “maximizing your Social Security benefits”. Frankly, it makes me sick, and I’m 66! Standard, baby-boomer, still working because I Want To. Most of my friends and acquaintances think I’m nuts for this.
In roughly nine years (2025), outlays for Social Security, Medicare, Medicaid, and interest on the national debt will be equal to all tax revenue taken in. We need serious cuts to those programs — we can’t stay solvent with just a little tinkering to prevent waste, fraud, and illegal immigrants collecting benefits.
Do we need to address illegal immigration? Of course. But SS/Medicare/Medicaid exist due to and will die because of American citizens — the ones who elected politicians who created the programs, the ones who didn’t have enough kids to pay the taxes to support the programs, and the ones who demand their checks through these programs.
We’re borrowing about $1 Million every minute, about the same as when Bush 43 left office at the height off the Great Recession. The only reason deficits are “way down” is because Obama and Congress ballooned the deficit UP by roughly $1 Trillion ANNUALLY in 2010-2012. And it worked perfectly. . . now the clever people are going around talking about how much the deficit has come down even though the debt has doubled not once but twice this century. So, in rough numbers, in just the most recent 15 years we’ve accumulated more debt than the previous 210 years—by a factor of 3! Where the hell are the streets paved with gold!?! What do we have to show for all that debt except demands for more free stuff?
To quote the classic line from Full Metal Jacket: It’s a great big sh*t sandwich, and we’re all going to have to take a bite.
Everybody is going to have to take a hit. That includes current Social Security and Medicare recipients. All of them [FWIW I’m 64].
Means testing and raising the age to collect full benefits have too many problems associated with them to work. The idea I like is cutting the rate of increase of the Social Security COLA to, say, 50% of the rate of inflation. Maybe flattening out however the top end of benefits are calculated.
Take the hard-hearted step of putting limits on how much Medicare will spend, and on what. Sorry grandma, but at the age of 95 we’re simply not going to pay for a double hip replacement.
Meanwhile public employee pensions have to be reformed. At a minimum immediately stop making adding more emoluments to them. Quit digging the hole deeper.
Or maybe we should all vote for Bernie Sanders, put a match to the whole house of cards, get it over with, and whoever is left can crawl out of the rubble and start over.
There is no evidence to the Pethokoukis claim that Conservatives are going to refuse to deal with entitlement reform. Every major Republican politician has expressed a plan for reform of both Medicare, adding competition and driving down costs, and social security, means testing and raising retirement ages. If we win the presidency the speaker with the power of the purse has shown willingness to confront entitlement reform with his own personal budget.
How is now the time for depression?
We couldn’t make even minor changes over the past 30 years to avert the draconian change needed now. So, what is it you think you are seeing now that makes the dramatic changes you talk about politically feasible? That’s complete fantasy, I’m afraid.
We just print money and pretend a “trust fund” exists that will magically dispense the $100 to $200 Trillion in “unfunded liabilities” that everyone knows is there, but prefers to ignore. It only ends in crisis, when the ChiComs and others figure out we ain’t ever paying the interest on all those bonds they keep buying. At that point, we’re completely and irrevocably …. well, the technical term is “screwed.” And then the dollar stops being the world’s reserve currency . . . Americans have no idea how bad this can get. But the politicians who got us here will be dead and buried by then, having lived luxuriously en route to a happy grave.
I’m afraid this is the likely case scenario as Americans refuse to change. Most Americans have never lived through what’s headed our way.
Our ‘leaders’ are doing a great disservice by not disclosing to the people the future we face if we don’t change. And it isn’t just the money problems – likely civil order will begin to fail too.
But don’t worry, because Rubio! is going to fix this!! He’s the second coming of Reagan, or something.
When an entire nation goes bust, the pain is felt much deeper: the most basic systems and institutions that people have come to depend on simply disappear.
Argentina’s millennial debt crisis is a great example of this… suddenly the power failed, the police stopped working, the gas stations closed, the grocery stores ran out of food, the retirement checks stopped coming, and the banks went under (taking people’s life savings with them).
American people have NO idea.
Some leaders have tried:
The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America (by Sen. Tom Coburn). But he’s the exception that proves the rule.
Civil order is already teetering: Baltimore, Ferguson, Occupiers, Chicago on any weekend. It’s when expectations (not object conditions) are fundamentally at odds with reality, that civil order first declines and eventually collapses, and revolutions occur.
Paul Ryan used to sound good on the topic, but he’s changed since he was accused of wanting to push granny off the cliff. Now he talks about “keeping promises”. And that $1 trillion dollar budget passed!
The lefties probably don’ really care – an opportunity not to waste.
It has to be done but there is no point talking about it. Just do it. SS should be fixed as part of a tax reform. This means a tax reform like Cruz’s where the payroll tax is eliminated and payments are made from general revenue. There is no trust fund so it was always going to be paid from current payroll taxes and future general taxes. First best, since we have to pay existing obligations from general revenues, is privatize all younger workers the way the Federal government privatized Federal pensions. Medicare needs to be rolled into whatever replacement is put together when we abolish Obamacare. Privatizing SS, i.e. making a minimum savings obligatory and matching will solve the US chronic lack of savings which drives our external debt. The external debt is the one that matters. Few understand the issues about savings, growth, current account deficits, and all folks dependent on SS are scared. So don’t explain it or debate it in campaigns. Just do the tax reform and offer young people the option. Almost all people under 40 will take the private option. The rest can be swept up later, and to be sure we can delay retirement for everyone 50 and below that takes the defined benefit. This must not be put back, but should start year one as did Federal Retirement reform.
You might not like the current rhetoric, but Ryan’s entitlement substance is to the right of his initial Ryan Plan today (largely because he added Romney’s SS reforms). He’s always referred to keeping promises.
Reagan was pretty terrible on entitlements. He added catastrophic care, which Bush 41 thankfully withdrew before it took effect. He was amazing on other grounds. Most Presidents get their core reforms, and entitlement reform is to Rubio what tax cuts were to Bush 43.