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Wednesday, April 11, 2007

Robert Samuelson: Boomer Boomerang

Once again, Robert Samuelson lumps all the social insurance programs together and foresees a dire future, in this case generational warfare. But as Dean Baker continually and correctly reminds us, Social Security is not the problem, and the programs themselves are not to blame - Medicare is not the cause of the growth in costs for health care:

The Washington Post ... complained about ... "the coming crisis in Social Security and Medicare." The non-partisan Congressional Budget Office's most recent projections show that Social Security can pay all scheduled benefits, with no changes whatsoever, until 2046, and roughly 75 percent of scheduled benefits for many decades after that date, even if no changes are ever made. ...

The Medicare story of course boils down to projections of exploding health care costs. If the health care system is not fixed, then "fixing" Medicare is irrelevant. We can zero out the program, but exploding health care costs would still devastate the economy. If the health care system is fixed, so that costs in the U.S. are in line with health care costs in other wealthy countries, then Medicare would be easily affordable. ...

I think the last point is too often missed - it's not the Medicare program, it's the growth in health costs that is the source of the dire projections for rising budget deficits.

Nevertheless, here's Robert Samuelson complaining about the budget pressures from the Social Security, Medicare and Medicaid programs and the generational divide it will bring about:

Boomer Boomerang, by Robert J. Samuelson, Commentary, Washington Post: Cassandra Devine knows how to solve the coming "entitlements" crisis, preordained when the 77 million baby boomers begin hitting 65 in 2011: Pay retirees to kill themselves, a program she calls "transitioning." Volunteers could receive a lavish vacation beforehand ("a farewell honeymoon"), courtesy of the government, and their heirs would be spared the estate tax. If only 20 percent of boomers select suicide before the age of 70, she says, "Social Security, Medicare, Medicaid will be solvent. End of crisis."

Okay, Devine is a 29-year-old fictional blogger in Christopher Buckley's satirical novel "Boomsday." Infuriated at the injustices awaiting her generation, she becomes an instant media celebrity with a gift for incendiary rhetoric. "Someone my age will have to spend their entire life paying unfair taxes, just so the Boomers can hit the golf course at sixty-two and drink gin and tonics until they're ninety," she tells one TV reporter. ...

First, a generational backlash is inevitable. ...[T]he idea that younger workers will meekly bear the huge tax increases needed to pay all boomers' promised benefits is delusional. The increases are too steep, and too many boomers -- fairly wealthy and healthy -- will seem undeserving.

Consider: In 2007, Social Security, Medicare and Medicaid constitute 44 percent of the $2.7 trillion federal budget. To pay all future benefits could ... easily require tax increases of 30 to 50 percent by 2030. ...

Second, boomers will want even more benefits...: closing the "doughnut hole" -- a gap of coverage -- in Medicare's drug benefit; more lenient tax treatment for retirement accounts; more payments for nursing homes.

Out in front will be the 38-million-member AARP, the nation's most powerful interest group. In the past four years, notes National Journal, it's spent $88 million on lobbying. ... AARP's new public relations campaign (slogan: "Divided We Fail") misleadingly aims to project an unselfish and high-minded image. In practice, it means AARP will support higher government spending for all age groups, which (of course) will increase taxes further for tomorrow's workers.

For example, AARP urges the expansion of SCHIP, a program of health insurance for poor children that, ironically, illustrates the nation's twisted priorities. In 2007, SCHIP will cost $5.7 billion; Social Security and Medicare, $1 trillion. Well, maybe SCHIP should be expanded, but only if -- a test of AARP's real commitment -- cuts in Social Security and Medicare benefits pay for the expansion. A doubling of SCHIP would require cuts of about one half of 1 percent.

Social Security and Medicare are an essential part of the social fabric. ... But the vast benefits -- paid too early and too indiscriminately -- have become disconnected from genuine need. Unless the two are reconnected, these successful programs will tear at the social fabric. It is unfair to blame only baby boomers for not acting preemptively... Still, boomers deserve special disapproval.

"Baby Boomers," says Buckley's Devine, "made self-indulgence a virtue." Sure, that's a stereotype, but for opinion leaders and politicians, it is uncomfortably accurate. Consider Newsweek. It has a regular feature, "The Boomer Files," that celebrates boomer musicians, comedians, sports heroes and TV series. It discusses how boomers are "redefining the 'golden years' " -- but not a peep about the costs for their children.

I was born in late 1945 and count myself a part of this failure. In our careless self-absorption, we are committing a political and economic crime against our children and perhaps -- when they awaken to their victimization -- even ourselves.

He says:

Well, maybe SCHIP should be expanded, but only if -- a test of AARP's real commitment -- cuts in Social Security and Medicare benefits pay for the expansion.

Why does the expansion of SCHIP have to be paid for by reducing Social Security and Medicare as some test of AARP's commitment to children? I don't see that, there are plenty of other places to get the money. The program cost $5.7 billion in 2007. How much revenue was lost from tax cuts? Lots, no matter what the Lafferites try to tell you. The "twisted priority" is that there any poor children at all without health insurance.

    Posted by on Wednesday, April 11, 2007 at 12:06 AM in Economics, Health Care, Social Insurance, Social Security | Permalink  TrackBack (0)  Comments (14)

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