[quote]BostonBarrister wrote:
A little more on entitlements.
It was so cute when Hillary stood up and gave a standing O when Bush referenced the fact that Congress hadn’t passed his Social Security reform plan.
But Bush pointed out immediately afterward that it still needs to be fixed, and boy is he correct. Social Security, Medicare and Medicaid are the biggest consumers of federal dollars - by a huge margin - and the Baby Boomers haven’t even retired yet.
From a page 1 WSJ news piece today:
[i]President Bush on Monday will tell the nation what he wants done with the budget next fiscal year. But the significance of his proposals and Congress’s response is dwarfed by one daunting fact: Some 84 cents of every dollar the government spends is essentially committed before he and the legislators even have at it.
…
Entitlements are the real elephant in the room. Formulas for spending on these social programs are set by law. Anyone eligible can collect. And the programs are growing far faster than either inflation or the economy, some 8% a year.
Medicare, at $391 billion this year, is close to equaling the entire domestic discretionary slice of the budget. Add in Social Security and the federal share of the state-run Medicaid program for the poor, and the big-three entitlements total $1.1 trillion for this year – $3 billion a day. This spending is the big issue in the federal budget, not post-Katrina rebuilding, headline-grabbing pork like Alaska’s ridiculed bridge to nowhere, or even the costly war in Iraq.
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The president addressed entitlements in his State of the Union speech by calling for a bipartisan commission to offer solutions. “The rising cost of entitlements is a problem that is not going away,” he said. But skeptics abound in both parties. What is missing, they say, is political will and trust. Even some supporters predict Mr. Bush will end up doing what he has vowed in nearly every stump speech that he won’t: Leave these problems to a future president and Congress. In that course, he would follow President Clinton, who also hoped to shore up the popular programs but who was defeated by political paralysis.
“This will not get done in this president’s term,” predicts Republican Rep. Jim Kolbe of Arizona, a longtime advocate of entitlements reform. Yet presidential leadership is essential, he adds, because “Congress is never going to be willing to deal with this, because the members are always up for re-election, every two years” in the case of the House.
Few dispute the staggering dimensions of the problem. Mr. Bush and analysts in and out of government use the same word to describe the fiscal trend: unsustainable.
Social Security spending now equals 4.2% of the gross domestic product, the value of all goods and services the U.S. economy produces. Under current policy, it will rise to 6.4% in 2050, according to the CBO. Medicare and Medicaid combined now are about 4.5% of GDP. Fueled both by changing demographics and by rising health costs, the health programs are projected to balloon, by 2050, to as much as 22%. Yet the entire federal budget has averaged only about 20% of GDP since the end of World War II.
Moreover, federal taxes don’t cover even 20%. They average 18% of GDP – hence the persistent budget deficits.
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By all accounts, a solution to the entitlements spending problem must be bipartisan so that the parties jointly convey the need for sacrifice and share political fallout. That was dramatized by Mr. Bush’s humiliation on Social Security: Democrats stood firm against his insistence on carving private accounts from a portion of the system’s revenue, and against his proposed reductions in future benefit promises. Republican leaders did nothing to advance his proposal, fearing political suicide.
More recently, these congressional leaders have struggled for months to muster Republican votes to pass a deficit-reduction bill lowering Medicare and Medicaid spending by almost $50 billion over 10 years. That would equal less than 0.006% of the projected spending on the two health-care programs over the coming decade.
Democrats, plus moderate Republicans such as Ohio’s Sen. George Voinovich, nearly derailed the legislation. They charged that the benefit reductions and higher costs for low-income families were “immoral,” given that the savings were intended to offset a pending five-year, $70 billion tax-cut bill.
Cost-saving options on Social Security could be simple and straightforward. They include slightly increasing retirement ages; reducing annual cost-of-living increases and the formula for computing retirees’ initial benefit; and expanding the amount of income subject to Social Security payroll taxes so the biggest earners pay more. Neither party will do any of this without political cover.[/i]
I personally want out of this whole morass. Personal accounts are what I want for social security and health care. But they definitely need to do something on both fronts.
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Did you notice that Hillary seemed to be getting a lot of “face” time on the screen?