May 22, 2013
‘Entitlements’ Take a Bum Rap
Posted on Feb 23, 2009
By Marie Cocco
Now that so many of us have been whipsawed financially, it is time to wipe the term entitlement reform out of the political dictionary.
The phrase is a monument to the dark art of disinformation. Its premise is that federal “entitlements”—that is, Social Security, Medicare and Medicaid—are bankrupting the country and weighting down generations of younger Americans with the extraordinary burden of caring for their aging parents and grandparents.
People bought the propaganda—at least until an irresponsible consumer credit binge, rapacious banks and rampant speculation began bankrupting the country and weighting down generations of Americans, young and old. Now we have to deconstruct decades of this disinformation about the “entitlement crisis” before policymakers can confront whatever crisis really is at hand.
First, Social Security isn’t part of it, and never has been. Medicare and Medicaid are costly and burdensome not because they are “entitlements” but because they are part of the foundering American health insurance system—a system that is costly and burdensome.
President Obama knows this. Yet he continues to lend too much of his credibility to the conventional thinking, shaped by decades of conservative rhetoric and backed by far too many Democrats, that somehow the “entitlement” crisis has to be confronted—and now. Notably, many of the people who are perennially warning of this crisis are the very sages who said it could be solved by creating private savings accounts to replace much of the guaranteed monthly benefit that Social Security provides. Just think how well that would have worked out.
You would think that with 401(k) balances shrinking, housing markets collapsing and the broader economy crumbling, Obama would have more pressing worries than concerns about fixing a program that has worked well for more than seven decades. Yet in the run-up to Monday’s “fiscal responsibility” summit, the president unwisely conveyed the sentiment that Social Security must be fixed—and soon. He invited to the meeting some of the soothsayers whose dogma on Social Security has been proved wrong again and again.
At least we now know that with 130 participants, this “summit” is unlikely to produce concrete results. And that’s good.
“Social Security is the most fiscally responsible part of the entire federal budget,” says Nancy Altman, who was a top aide to Alan Greenspan when the 1983 commission headed by Greenspan really did have to avert an imminent crisis. “Social Security is in surplus for the next two decades.”
And beyond that, the system can pay full benefits through 2041, according to the Social Security trustees—or 2049, according to the Congressional Budget Office.
Rather than feed the myth that Social Security is part of an entitlement “crisis,” Obama should seize this moment to debunk it. To do so he must rhetorically divorce Social Security from Medicare and Medicaid.
Even though costs are growing swiftly, this doesn’t represent a crisis in Medicare or even the state-based Medicaid system for the poor. It’s a crisis in health care.
Independent studies have repeatedly shown that Medicare is as efficient—in many ways, more so—than the private insurance industry. The Kaiser Family Foundation, an independent health research organization, says that between 1970 and 2005, the growth in annual Medicare spending per beneficiary has been about a percentage point less than the growth in spending by private health insurers. This is so even though Medicare’s elderly patients are far more likely to be sick and need care than the younger population served by private insurers.
So the real problem in Medicare’s financing can’t accurately be described as one of “runaway” entitlement spending. It’s yet another case of political rhetoric running away from the facts.
The president says he wants to address long-term budget problems that were neglected—indeed, worsened—by his predecessor. There’s nothing wrong with that. But first the public has to understand what the problems really are. At the moment, it doesn’t. That’s partly because the current dire economic circumstances are likely to require years of deficit spending just to keep the downturn from worsening. But it’s also because we’ve been bombarded with false claims and over-the-top warnings about Social Security and Medicare that often have come from those who are ideologically opposed to these programs anyway.
When it comes to entitlements, the last thing we need is an “entitlement commission.” What we really need is a truth commission.
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