WELFARE FOR WHITE FOLK:

Why are we in this debt fix? It's the elderly, stupid. (Robert J. Samuelson, July 28, 2011, Washington Post)

By now, it's obvious that we need to rewrite the social contract that, over the past half-century, has transformed the federal government's main task into transferring income from workers to retirees. In 1960, national defense was the government's main job; it constituted 52 percent of federal outlays. In 2011 -- even with two wars -- it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.

These transfers have become so huge that, unless checked, they will sabotage America's future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.

Older Americans do not intend to ruin America, but as a group, that's what they're about. [...]

While 70 percent of respondents in a Pew Research Center poll judged budget deficits a "major problem," 64 percent rejected higher Medicare premiums and 58 percent opposed gradual increases in Social Security's retirement age.

What sustains these contradictions is a mythology holding that, once people hit 65, most become poor. This justifies political dogma among Democrats that resists Social Security or Medicare cuts of even one dollar.

But the premise is wrong. True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (that's for individuals, and couples would be higher).

The essential budget question is how much we allow federal spending on the elderly to crowd out other national priorities. All else is subordinate.

When trivial tax changes will buy us those means-tests and retirement age hikes from the Democrats, it's irresponsible not to do the deal.

Posted by oj at July 29, 2011 7:45 AM
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