Capital Exchange is a new blog featuring debate among some of Washington’s smartest budget and policy experts. –Eric Pianin, Washington Editor and Moderator
Bravo to Henry Aaron for correcting a recent alarmist New York Times story on Social Security, showing that we have no reason for concern because the system’s financial health of late has not changed in any significant way.
But Aaron’s broader point – that policymakers should include changes to Social Security in any serious effort to address the nation’s surging deficits – is worth more than the final paragraph that he devotes to it.
At first blush, you might not agree. After all, Aaron notes that “[p]rojected growth of health care spending accounts for more than all of the growth of deficits projected to unfold between now and 2050.” So, you might think, let’s address the problem at its source – cut the deficit solely by cutting health care spending. But we should try a broader, “everything-on-the-table” approach for three reasons.
First, we don’t know enough about how to greatly reduce health care costs without doing severe harm to beneficiaries, providers and the health care system as a whole. That’s why, along with specific cuts to Medicare, the new health reform law includes demonstration projects to test ideas, and it creates a new Independent Medicare Advisory Board to develop proposals to slow the rate of growth of Medicare and private health care spending that could take effect under some circumstances.
Second, we should not miss the opportunity that our fiscal challenge presents to scour the budget as a whole. On the spending side, we should restructure Social Security so that it better reflects the society of the future, one in which people live longer, lead healthier lives, and can work well beyond the traditional retirement age of 65. We should look more closely at other domestic programs, particularly on the discretionary side, because many have been on the books for many years and may have questionable records in achieving results. We should examine defense as well, for while our military has improved immensely in recent years, Congress continues to push weapons systems that the military doesn’t want simply to protect jobs across the country. And we should examine the tax code, a complex mess that fewer and fewer people understand, for ways to raise taxes on those best-positioned to pay more in order to obviate the need for drastic spending cuts.
Third, Washington’s major successes in addressing earlier bouts of surging deficits, particularly the big budget agreements of 1990 and 1993, have all reflected the same pattern: the White House and Congress came together around packages of both tax increases and spending cuts, and, on the spending side, on cuts affecting a broad array of programs. Conservatives simply won’t agree to tax hikes unless they see liberals agreeing to domestic spending cuts, and vice versa. The effort to build consensus for deficit reduction will be hard enough without focusing all attention on one highly contentious area of federal spending – health care – rather than spreading the pain across the entire budget.
Post a comment below or check out the rest of our experts' debate on the issue: Henry Aaron on Social Security's alarmist math; George Hager on its accounting fictions; Joseph White on the difficulty of finding savings in Social Security.
Lawrence J. Haas is former Communications Director to Vice President Gore and, before that, to the White House Office of Management and Budget. He's now a public affairs consultant who writes widely about foreign and domestic affairs, including fiscal policy.