WARNING: HANDS OFF MEDICARE AND SOCIAL SECURITY
Republicans are on a roll. Coming off the 2010 victory, they have gotten the Bush tax cuts extended. The courts look likely to strike down Obamacare. Americans increasingly believe that the president’s massive spending isn’t working and must come down. Even Democrats are lining up to block the EPA’s plans to restrict carbon emissions. Obama’s foreign policy lies in ruins, his coddling of Islamic fundamentalists, in the words of Rev. Jeremiah Wright, is “coming home to roost.”
The one sure way to mess it all up is for the GOP to engage in the political equivalent of imperial over-reach and try to cut (or reform) Medicare or Social Security before the 2012 election. Attempts to cut or even alter one or the other of these programs cost Clinton control of Congress in 1994, Republicans the presidency in 1996, Bush his popularity in 2005, and Obama his Congressional majority in 2010. When will they ever learn?
Some, like Congressman Scott Garrett (R-NJ), Devin Nunes (R-Calif) and Jack Kingston (R-Ga) and the editor of the Weekly Standard Bill Kristol correctly say that you can’t balance the budget, in the long term, without touching these two entitlements. But we need to defeat Obama in the short term – 2012 – and attempting to rein in either program is a sure way to lose.
And you don’t need to curb either Social Security or Medicare to achieve major deficit reduction. These two programs are not the culprits in the massive recent increase of the federal deficit. Over the past two years, Social Security has risen by 12% and Medicare by 16%. By contrast, nondefense discretionary spending has risen by 41% and welfare entitlements like Medicaid and food stamps are up by 54%.
It is there that we should concentrate our cuts. To curb future deficits, you do need entitlement reform. But to bring down the deficit in the next few years, all you really need to do is roll back these insane spending increases with which Obama has saddled us.
If you take three steps you can cut the deficit to 3-4 percent of GDP (it is now over 10 percent):
1. Rollback nondefense discretionary spending to 2008, pre-Obama levels and hold it there,
2. Block grant Medicaid to the states, roll it back to 2008 levels and build in a three percent retroactive annual increase for medical inflation,
3. Cut troop levels in Iraq and Afghanistan to 60,000 by 2015
Do these three things and you have a deficit below 4 percent of GDP by 2014.
Medicare and Social Security entitlements will drive the deficit – big time – later in the decade when significant numbers of baby boomers reach 65. So reform of these programs is important after the 2012 elections.
Then, the Social Security reforms outlined in Congressman Paul Ryan’s (R-Wisc) “roadmap” proposal make sense – a gradual increase in the retirement age of one month every two years and basing cost of living adjustments and benefit levels on price inflation not wage inflation for future retirees.
His concept of means testing Medicare is more problematic. It essentially makes Medicare too much like Medicaid albeit with different income thresholds. The Medical Savings Account approach with a backup of government paid catastrophic insurance makes more sense.
But first things first. We must shelve this debate until we have taken the Senate and defeated Obama. Why add a new gravestone to the cemetery of those who tried to cut these programs and re-elect Obama in the process?
Let’s remember that Republicans came to power in the House because of popular animosity against Obamacare. The $500 billion cut in Medicare drove seniors en masse to vote against the Democrats (by a 2:1 margin in 2010). To cut Medicare ourselves, now, would be the height of political insanity.
And what do we lose by waiting two years? Most current entitlement reform plans exempt current retirees and those now over 55 from their reach. If we wait two years, we just exempt those over 57 not those over 55 when we do pass our changes. No big deal.
America will be thrilled if the budget deficit, now $1.5 trillion, drops to about $600 billion by 2014 and if it is on a downward trajectory by 2012. The three steps suggested here will achieve these goals. Don’t push it too far.