Going Broke on Two Trillion Dollars
One of the more memorable moments in President Bush's State of the Union address was the applause. I mean the applause, not in general, but at the point of the speech where the Left side of the Congress rose up in applause and obvious glee at the words,"Congress did not act last year on my proposal to save Social Security."
Great.
As if the problem hasn't been presented clearly: The Wall Street Journal said today (Feb 3) that Social Security, along with other entitlements like Medicare and Medicaid, cost $3 billion dollars a day. Cutting discretionary spending is important, but the President's proposed reforms of $14 billion will be equal to the amount currently spent on these entitlements in a matter of 5 days. Enough about the numbers, there is obviously a lot of money being spent on these programs. Why?
Social Security or rather, "old age assistance," was created in 1935 with the passage of the Economic Security Bill. It is important to note two things: It was created in the midst of the Great Depression and it operated on the assumption that the generation reaching old age would be lesser or at least equal to those of the present working generation. This assumption is beginning to show its faults as the "Baby Boomer" generation reaches retirement age.
Medicare and Medicaid are health care programs designed predominantly to help the elderly and the poor respectively. Signed into law in 1965, they are encountering the same problems as Social Security - they are running out of money.
The problem with reform is that it will almost certainly reduce the amount of money flowing to the subscribers of these programs. But the problem of inaction is even greater. I, for one, certainly advocate the idea of privatization. The private market has historically done a better and cheaper job than the government in any arena. In response, some in the Democratic leadership has said the way to solve the problem is simple ... raise taxes.
Whatever the solution may be, blocking a plan or blocking even discussion on the basis of political gain or wrangling is no way to help anyone. In short, applauding because any solution could not be reached seems to be irresponsible to the point of being dangerous.
Great.
As if the problem hasn't been presented clearly: The Wall Street Journal said today (Feb 3) that Social Security, along with other entitlements like Medicare and Medicaid, cost $3 billion dollars a day. Cutting discretionary spending is important, but the President's proposed reforms of $14 billion will be equal to the amount currently spent on these entitlements in a matter of 5 days. Enough about the numbers, there is obviously a lot of money being spent on these programs. Why?
Social Security or rather, "old age assistance," was created in 1935 with the passage of the Economic Security Bill. It is important to note two things: It was created in the midst of the Great Depression and it operated on the assumption that the generation reaching old age would be lesser or at least equal to those of the present working generation. This assumption is beginning to show its faults as the "Baby Boomer" generation reaches retirement age.
Medicare and Medicaid are health care programs designed predominantly to help the elderly and the poor respectively. Signed into law in 1965, they are encountering the same problems as Social Security - they are running out of money.
The problem with reform is that it will almost certainly reduce the amount of money flowing to the subscribers of these programs. But the problem of inaction is even greater. I, for one, certainly advocate the idea of privatization. The private market has historically done a better and cheaper job than the government in any arena. In response, some in the Democratic leadership has said the way to solve the problem is simple ... raise taxes.
Whatever the solution may be, blocking a plan or blocking even discussion on the basis of political gain or wrangling is no way to help anyone. In short, applauding because any solution could not be reached seems to be irresponsible to the point of being dangerous.
posted by Matt Pitchford at 13:51
3 Comments:
I want to comment on your statement that "The private market has historically done a better and cheaper job than the government in any arena." I believe that this is true in most cases, but there are some areas that the government will do a better job in, such as courts and defense.
It's kind of like eating ice cream with a knife. Sure, you can do it, but it will be horribly inefficient. That's not because there's anything wrong with the knife itself, but because you're trying to use it for something it was never designed to accomplish.
In the same way, the problem with the government trying to be a provider is not that there's anything wrong with governments in general, but that we're trying to use our government for something it was never designed to do. (Constitutionally or Biblically.) The fact that the government does a poor job of providing for people should be no more surprising than the fact that it's hard to eat ice cream with a knife.
Two trillion is a lot of bucks.
DJ: I agree with your points. Perhaps I should clarify my position somewhat. The private market does beter in any economic arena. I enjoy your knife analogy.
Cory: Yes. Yes it is.
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