Fear Factor

by Jonathan Chait | 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.

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