OCTOBER 22, 2007
The beginning of the fall season brought to Washington another
periodic upsurge of entitlement hysteria. Newcomers were alarmed,
but those of us who have witnessed the spectacle were able to take
it in with some patience. Entitlement hysteria pops up all at once,
sometimes prompted by a discrete stimulus, such as a report of the
Social Security Trustees, but other times seemingly at random.
Affected parties tend to furrow their brows and scold politicians
in particular, and Americans in general, for our myopia in the face
of the demographic tidal wave of retiring baby boomers who will
drown the federal budget with unsustainable benefits.It is unclear exactly what brought the latest episode upon us. A few
weeks ago, Fred Thompson began winning plaudits for his gravelly
voiced warnings about the entitlement menace. "No politician wants
to face up to it," he warned. Soon, NBC's Tim Russert was
subjecting the Democratic presidential field to a series of
glowering demands that they produce a solution to the entitlement
crisis. A Washington Post editorial flayed Hillary Clinton's lack of
specifics on the issue as an "irresponsible dodge."
Those afflicted with entitlement hysteria are identifiable not by
the realization that big social programs will need a fix--which is
widely understood-- but by the urgency and gravity of their pleas.
Entitlement hysterics' favorite statistic is the retiree-worker
ratio. In 1950, they will explain in somber tones, there were 18
workers for every retiree. But, by 2030, there will be barely more
than two. Absent reform, they warn, we will all be wage slaves,
toiling away as our languid baby-boom masters while away their
declining years on cruise ships and RVs.
There's some truth to their analysis, but it misses the point in a
crucial way. The two largest entitlement programs, Social Security
and Medicare, are in very different shape. The Social Security
Trust Fund is scheduled to last until 2042, at which point we'll
have to hike up taxes or trim spending a bit. Medicare, on the
other hand, faces a day of reckoning in 2019.
Yet one of the oddities of the entitlement hysterics is that they
are far more obsessed with the minor problems of Social Security
than with the massive problems of Medicare. Indeed, if you look
closely at their dire proclamations, they inevitably follow the
same pattern: They begin with an ominous summation about
entitlements--thus lumping together Medicare with Social
Security--then swiftly proceed to demand that Social Security be
shored up forthwith.
Russert's recent harangue at the Democratic presidential debate was
a classic example. He began by warning of the crisis faced by
"Social Security and Medicare" but proceeded to ask no fewer than
14 questions about Social Security, and zero about Medicare. It's
as if he began fulminating against crime in the greater New York
area and then immediately began demanding a large new police
deployment in Chappaqua.
Should they stop being hysterical about Social Security and start
being hysterical about Medicare? Well, that would be a start, but
it would still elide the deeper problem. The reason Medicare is in
such worse shape than Social Security is that it has to account for
exploding health care costs. Their focus on demographics and greedy
baby boomers is entirely misplaced. Indeed, the "entitlement
problem" is mostly--three-quarters, to be precise--a function of
rising health care costs.
Since you can't solve the entitlement problem without solving the
health care problem, one might think that the entitlement hysterics
would have gradually moved on to becoming health care hysterics.
(There's also the fact that Social Security is solvent until 2041,
but over 40 million Americans lack health insurance right now.) Yet
this is another puzzling thing about entitlement hysteria: the
sheer persistence of the obsession. It's true we have some large
federal programs that are going to have to be shored up. But why do
they consider this to be a matter of such unique urgency? Put aside
the war in Iraq, for which plenty of people (including me) lack any
confident solution. In addition to the health care crisis, there's
global warming. There are numerous loosely secured nuclear sites
throughout the world, any one of which could some day provide the
raw material for a terrorist attack of unprecedented scale. There
are numerous diseases threatening the lives of millions of Africans
whose deaths could be prevented at relatively modest expense.
These other calamities have one thing in common: The consequences of
inaction are permanent. Carbon released into the atmosphere can
never be recovered. Africans who die from aids can't be brought
back to life. And fissile material captured by terrorists can't
very easily be taken back.
Compared to such disasters, the entitlement nightmare scenario isn't
so nightmarish. If we do absolutely nothing to fix Social Security,
then, 35 years from now, the program will have to start paying out
three-quarters benefits, or we'll have to raise taxes. It's not
ideal, but it doesn't keep me awake at night.
Yes, the fix would be easier and fairer if we implemented it sooner.
But the closer we get to Social Security's insolvency date, the
easier it will become politically to do the fix. The last major fix
to Social Security, implemented in 1983, came about just as the
Trust Fund was on the verge of insolvency. The economist Herb Stein
once noted that any trend that can't go on, won't. Social
Security's future shortfalls would seem to be the perfect example of
such a trend, and thus the perfect example of a problem that will
solve itself in time.
Ten or 20 years ago, you could plausibly deem Social Security's
finances among the most pressing national problems. Those who were
willing to take on the problem were admired for their
farsightedness, bipartisanship, and seriousness of purpose. Social
Security's place on our list of national problems has long since
been overtaken, but, among Washington establishment types who
remember those days, the issue retains its totemic significance.
Entitlement hysteria has become less a response to a crisis than an
expression of statesmanship.
Four days after his debate inquisition, Russert boasted to an NBC
colleague on air, "I tried to get these candidates to take
positions on Iraq, on Social Security, on the big issues." They
didn't, of course. But noble failure in the face of complacency and
cowardice is the entitlement hysteric's perpetual burden.