THE BLOG
06/22/2011 04:41 pm ET Updated Aug 22, 2011

How Social Security, Medicare "Plant the Seeds of Future Prosperity"

David Leonhardt, along with Matt Bai, is part of the New York Times' center-right Washington tag team. So it's no surprise when he mourns Congress's failure to "rein in" entitlements. But every so often he goes a bit too far.

In his column, he makes the legitimate point that cutting discretionary spending as part of what's become a bipartisan drive to reduce the deficit, isn't such a good idea.

Discretionary spending let the Defense Department build the Internet. It let the National Institutes of Health finance life-saving research. It has helped make possible the semiconductor, the broadband network, the highway system and airports.

True enough. The private sector has never been the fount of creativity that free-marketeers would have us believe. But Leonhardt goes too far when he lumps in defenders of Social Security and Medicare with Republican foot-in-the-door opponents of tax hikes.

Tax cuts don't deliver nearly the economic oomph that their advocates claim. Medicaid, Medicare and Social Security, central to a decent society as they may be, certainly don't do much to plant the seeds of future prosperity.

We've seen the proof about tax cuts in the decades of wage stagnation that have accompanied a steady stream of marginal tax reductions for the "investor class" stretching back to the Carter administration (that's right, they preceded Reagan). But Social Security, Medicaid, and Medicare aren't just safety net programs, as Leonhardt implies. They do indeed "plant the seeds of future prosperity."

More than one in five Social Security recipients -- it's distressing how often supposedly informed people have to be reminded of this -- are survivors or the spouses and children of retired or disabled workers. And that figure is rising. In 2009, 35 percent of beneficiaries receiving their first Social Security payments were survivors, spouses, and children. More than 3.2 million children and students under the age 19 got checks through the program that year.

Social Security helps these people keep a roof over their heads, helps keep them in school, helps keep their families together. That's an investment in the future. Medicaid keeps basic health care accessible to children of poor families who can't afford health insurance, which is most families in this category.

Of the "big three" entitlements, Medicare is the only one directed exclusively at the elderly. But even Medicare contributes to future prosperity.

One of the most troubling trends of recent years is the amount of assistance that overburdened working families have to provide to aged parents and other relatives. This is a function in part of rising health care costs, rising Medicare premiums, erosion of Social Security benefits thanks to the 1983 Amendments to the Social Security Act, and the tearing away of other parts of the safety net.

But how much worse would it be if Medicare didn't exist -- or was destroyed in order to save it, along the lines of the House Republican plan to voucherize it? The burden on working households would become intolerable.The need for additional income would force more children out of the home and into the workforce, rather than attending college and acquiring more high-ticket skills.

Leonardt's mistake is to define "the seeds of future prosperity" too narrowly. R&D and infrastructure are important. So is education. But human capital is even more important. Any investment in roads, schools, and scientific knowledge is canceled out if this society can't produce people with the knowledge -- and even the health -- to make use of them. Individuals don't exist in isolation. They live in families, households, communities. Social Security, Medicare, and Medicaid are an investment in these, and thus an investment in a prosperous future.