Cut Medicare and Social Security now
Both liberals and conservatives sometimes have good ideas for cuts, but the popular “let’s cut this” lists aren’t the real problem. The NEA is a statistical rounding error in the federal budget; subsidies to farmers contribute less than 1% of all spending; and much of the Pentagon’s spending is driven by service member salaries and benefits that are politically impossible to touch.
In this context, the “third rail” of American politics — cuts to Social Security and Medicare entitlements for current and near-future beneficiaries — are the best, most humane, and least painful targets for real cuts in the short term. The budget proposed by Rep. Paul Ryan, R-Wis., left them out by pushing off most reforms by more than a decade. But a look at the budget shows why deep cuts to other federal programs are difficult or undesirable, and how Medicare and Social Security cuts could be done in a fashion that would cause surprisingly little pain for the country.
For starters, Social Security and Medicare/Medicaid represent 43% of the federal budget; by far the largest share. By way of comparison, 13% of government spending is allocated to other “mandatory/entitlement” programs (like food stamps and highway maintenance); 19% for defense; 18% for domestic discretionary spending; and the final 6% for debt interest.
Like Medicare and Social Security, each category of spending has strong advocates. While there’s certainly waste in the domestic discretionary budget, a large portion of the budget involves programs that are true core government services like the Federal Bureau of Investigation, the Centers for Disease Control and the Food and Drug Administration’s Food Safety and Inspection Service. And even if the domestic discretionary budget were cut in half, it still wouldn’t bring the budget close to in-balance.
Likewise, while some cuts to defense spending probably would make sense, they aren’t very likely. Mitt Romney has actually promised to increase defense spending and President Barack Obama has made no promises to cut it. Debt interest obviously needs to be paid, even if a few whackjobs argue otherwise. The list could go on. In short, there’s no reason to think any particular program will be easy to cut.
And this leaves entitlements, ironically, as the low-hanging fruit. The fundamental purpose of Social Security is to assure that no old people live in deep poverty while the Medicare program exists to assure everyone over 65 gets the health care they need. The current programs accomplish this by giving every old or disabled person a pension check each month and providing full-scale health insurance to everyone who qualifies for Medicare. These programs do “work,” but they have the unfortunate side effect of providing benefits to people who don’t need them. It’s absurd that Warren Buffett, the second wealthiest person in the country, gets both Social Security and Medicare. Few would disagree he should pay his own way.
Fortunately, there is an easy fix for this: A Social Security minimum guarantee and a Medicare voucher system. A minimum government-guaranteed income of somewhere between 130% and 200% of the poverty rate for everyone over age 65 would cost far less than the current Social Security system and would actually increase benefits for people who need them the most. Some sort of voucher that covered the full cost of health care for poorer old people and declined in value (eventually to zero) for people who earn a lot of money well into their 70s, could replace Medicare.
Some people might complain, sure, if their benefits were cut, but, relative to the other cuts–defense, core infrastructure, assistance to the truly poor–helping the already well-off better enjoy their retirements simply should not be a national priority.
Support for these types of cuts would almost certainly produce rage at the ballot box — which would be unfortunate but necessary. In the end, however, they’re a lot better and, ultimately, a lot easier than the alternatives.
