Now that “the anti-deficit hysteria of the Great Recession has given way to a backlash of complacency,” lawmakers and the public are ignoring “an $82 trillion avalanche of Social Security and Medicare deficits” coming over the next few decades, warns Brian Riedl of the conservative Manhattan Institute.
Riedl’s full 2,600-word cover story for the National Review is worth reading, but here’s an overview of his argument:
How did we get here? “Conservatives used to prioritize long-term fiscal solvency,” Riedl writes.
Then Donald Trump won 88 percent of Republican voters — and the presidency — while pledging that ‘there will be no cuts to Social Security, Medicare & Medicaid.’ Six months later, a Pew poll revealed that only 15 percent of Republicans support trimming Medicare, and only 10 percent support Social Security reform. (Democratic support is 5 and 3 percent, respectively.)
In other words, the entitlement-reform generals have no army.
Today, concerns about Social Security and Medicare are dismissed as the dying voice of the out-of-touch Washington establishment. For conservative leaders, the surest path to credibility with the grassroots lies in focusing on working-class “real America” concerns such as globalism and income inequality. And nothing could be more tone-deaf than depriving struggling families of their earned Social Security and Medicare benefits because of some green-eyeshade budget-deficit paranoia.
Why does it matter? “This complacency could be catastrophic,” Reidl argues. "Social Security and Medicare reform has fallen off the radar precisely when it is the most urgent." He lays out some nunvers to explain why:
Over the next 30 years, according to data from the Congressional Budget Office, Medicare will run a $40 trillion cash deficit, Social Security will run a $19 trillion cash deficit, and the interest on the resulting program debt will be $23 trillion. (To inflation-adjust these figures, trim by one-third.) … Even readers inclined to be skeptical of 30-year projections should take this one seriously. Future inflation rates are indeed anyone’s guess, but the existence of 74 million Baby Boomers retiring into Social Security and Medicare is an actuarial reality. These projections even optimistically assume a slowdown in per capita health costs. They are the rosy scenario.
What should we do about it? Riedl lays out some cuts and changes that would address the projected long-term shortfalls. The details of his suggested reforms, like raising the eligibility age for Social Security and means-testing Medicare benefits, are bound to be controversial. But those details hardly matter in an environment where both politicians and the public prefer not to have the conversation about Social Security and Medicare at all. “Neither party wants to sign up for a suicide mission, especially if the other party is not on board,” Riedl writes. “The deficit will continue expanding, key programs will continue to be squeezed, and taxes will rise until politicians and voters finally confront the elephant in the room.”