Spending and taxes will be center stage in the 2012 presidential
election, but at the heart of those pivotal issues is one that is
paramount in terms of America’s future: cascading mandatory
spending on entitlements such as Medicare and Social Security.
Erskine Bowles, co-chair of President Obama’s bipartisan
reduction commission, the one he ignored, recently
described the situation we face in the starkest of
terms:
The economics is very clear. The politics is very
difficult….If you take 100% of the revenue that came into the
country last year, every single dime of it was consumed by our
mandatory spending and interest on the debt.… That means every
single dollar we spent last year on these two wars, on national
defense, homeland security, education, infrastructure, high
value-added research-every single dollar was borrowed, and half of
it was borrowed from foreign countries.
These stunning facts should appall everyone, especially liberals
who prize so many domestic programs which are continually squeezed
by the weight of entitlement spending.
The distinguished businessman and Lincoln historian, Lewis
Lehrman,
wrote on this site, “Total direct Federal debt is now about
equal to total U.S. output.”
Lehrman, who argues eloquently for a return to dollar-gold
convertibility, noted the failure of the “super-committee” of
Congress and as many as fifteen legislative attempts by Congress
during the last generation to control government spending including
those of “the all-time budget hawk,” former Senator Phil Gramm of
Texas. All have collapsed. Even Milton Friedman’s call to starve
the beast by cutting taxes has failed with the resulting
over-spending and budget bloat.
Putting it in the simplest terms, if entitlements are not
reformed, there is no “government” in the traditional sense without
substantial tax increases and more federal spending of a greater
percentage of gross domestic. Either way, there is no possibility
of a vibrant private sector and economy, only a lethargic,
collective beast of burden for a gargantuan federal government
commandeering private resources for income transfer, industrial
policy, and ethanol subsidies.
Recognizing as paramount the juggernaut which is
entitlement spending is not to dismiss, the spectacle of
uncontrolled spending in the rest of the discretionary federal
budget. According to
Steven Pearlstein, the liberal business columnist for the
Washington Post, citing research from Stephen
Fuller of George Mason University, the region around the
nation’s capital grew by 14 percent since 2007 while the national
economy expanded by only 3 percent.
“A fair reading of Fuller’s most recent report suggests
that most of that growth — perhaps all of it, once the typical
multipliers are applied — has been the result of rapid increases
in spending by the government,” said Pearlstein.
In addition, in the past decade federal employees
increased by 50,000, wiping out any reductions from the Clinton
administration. Federal procurement spending over the decade grew
166 percent, to $80 billion up from $30 billion.
In a recent
op-ed for USA Today, GOP presidential candidate, Mitt
Romney, addressing the question of America having become an
“Entitlement Society” instead of an “Opportunity Society” as it was
originally conceived, did come up with a pretty good test for
judging discretionary spending. “Is this a program so critical to
our own nation’s future that we should borrow money from China to
pay for it?”
But, as Romney recognized, the demographic and fiscal
realities of the entitlement crisis dwarf all other concerns. Many
also believe it is a threat to national defense. Yet, as things now
stand, entitlement spending will double by 2050 and
consume all tax revenues by 2049, according to the Heritage
Foundation, a conservative think tank.
Enter Paul Ryan, GOP House Budget Chair, and the fiscal
and intellectual leader of the congressional wing of the Republican
Party who had the guts-and brains-to propose
“A Roadmap for America’s Future,” designed to reform entitlements,
health care, and the tax code. Ryan will be the dominant player no
matter who is in the White House, which is a good thing for the
country.
Ryan appreciates the high stakes involved with mandatory
entitlement spending and has put in the hours of hard thinking on
this issue, even now negotiating with an honest liberal such as
Senator Ron Wyden (D-OR) to advance the cause of reform.
Robert J. Samuelson, an astute and candid economics
journalist, has accurately
pinpointed what is necessary in this debate.
What is missing is “a moral rationale” for change and “a new public
philosophy” that acknowledges reality:
It’s not in the national interest to subsidize farmers, because
food would be produced at low cost without subsidies. It’s not in
the national interest to subsidize Americans, through Social
Security and Medicare, for the last 20 or 25 years of their lives
because healthier people live longer and the huge costs make the
budget unmanageable. It’s not in the national interest to subsidize
mass transit, because most benefits are enjoyed locally: If the
locals want mass transit, they should pay for it.
To date, only Paul Ryan has had the courage, conviction, and
eloquence to make the case that needs to be made.
Hopefully, others in the GOP’s congressional wing,
especially in the next Republican Senate, will immerse themselves
in this issue for the sake of the country and our grandchildren.
Even if the matter of entitlements were to be swept under the rug
during the general election, it is going to be impossible to ignore
in 2013 and beyond.
