THE BLOG
05/08/2009 10:31 am ET Updated May 25, 2011

Commissions, Cuts and Crisis Calls

While Congress was negotiating a recovery package to bring our country out of the worst economic crisis since the Great Depression, some deficit hawks were promoting the notion that the short-term costs of the economic downturn and the recovery plan ought to be linked to long-term reductions in Social Security and Medicare. They have characterized expenditures for these critical programs as representing an "entitlement crisis" or a "long-term fiscal crisis." Senators Judd Gregg and Kent Conrad, Representative Jim Cooper and others are pressing for enactment of an entitlement commission or task force, a very small group of legislators and administration officials who would design legislation to address issues affecting Social Security, Medicare and Medicaid along with federal taxes. The fundamental flaw with these proposals is that America does not face an entitlement crisis; it faces a health care financing problem.

According to the Congressional Budget Office (CBO), the rate at which health care costs grow relative to national income -- rather than the aging of the population -- is the most important determinant of future federal Medicare and Medicaid spending. In fact, according to projections by CBO, if every entitlement in the federal budget were repealed outright -- eliminating Social Security, Medicare, Medicaid and other critical programs -- but nothing were done to slow the growth in health care costs overall, we would still find ourselves spending almost 70 percent of the nation's wealth on health care by 2082. On the other hand, if the rate of growth in overall health care is restrained so it is no longer growing faster than the rest of the economy, Medicare's long-range financial deficit could be cut by well over one-half.

Contrary to the politicized crisis rhetoric, the Social Security Trustees report that Social Security will have sufficient funds to pay full benefits through the year 2041. Even better, the Congressional Budget Office projects that full benefits can be paid through 2049. No other federal program is subject to such strict, long-term spending restrictions and oversight. The Social Security Trustees report every year on the income and outgo of the fund over a 75-year period. Over the next 75 years, Social Security has a funding gap, but that gap is both modest and manageable. Moreover, even if no changes at all were made in Social Security -- and no one is recommending that -- incoming revenues after 2041 would be sufficient enough to finance 78 percent of benefits.

Social Security and Medicare are distinct programs facing unique challenges and solutions. Less than 20 percent of the combined shortfall projected in Medicare and Social Security over the next 75 years is in the Social Security program. While combining these programs under the "entitlement" umbrella helps create a sense of crisis, this approach offers nothing meaningful toward finding real policy solutions. The move in Congress to create an "entitlement" commission, suffers from the same flawed premise of a one-size-fits-all approach.

Under the proposals for a commission or task force, legislation would be fast-tracked through Congress on a limited time schedule with no opportunity for amendment. This runs counter to the call by the Obama Administration for transparency and participation by the American public in policy decisions. Enacting restrictive time lines and prohibiting amendments to push through changes of this importance to millions of Americans, especially senior Americans, ultimately disenfranchises the public and hurts the political process.

The current economic meltdown has reinforced the importance of Social Security as the basic foundation for retirement. The collapse of investment savings and the sharp decline in housing values have significantly reduced the retirement security of millions of Americans. Social Security was created in times much like today to provide Americans with basic income security they could count on in old age. The average benefit in 2009 is a modest $13,000 per year. Surely, the lesson of the current financial crisis is not that we should reduce the protections of America's most successful retirement security program. Nor is the lesson that we should cut health benefits for those over 65 when health coverage for all Americans has emerged as an achievable goal.

Social Security and Medicare did not bring us to this economic precipice or turn our budget surplus into record debt in just eight years. These vital programs should not be used as a distraction allowing Washington to ignore the failed economic policies that have actually caused this crisis. Our newly elected President and the members of Congress must learn from this past to chart a new path for our future and they shouldn't shift the responsibility to yet another Washington commission to get that job done.