Back-to-back briefings last week put a harsh spotlight on the deep hole left by the budget policies of George Bush’s first term. Millions of Americans will be paying the price for the fiscal profligacy of this misnamed conservative government.
The bad news, delivered in the first report, is that the camouflaged domestic spending cuts contained in the Bush budget will — if accepted by Congress — do serious damage to education initiatives, low-income assistance and environmental programs over the next five years.
The bulk of the remainder of the column gives a decent, and largely critical, overview of what will fall prey to Bush’s economic policies (Ready for a surprise? It’s education, the environment, welfare, and — though Broder strangely doesn’t mention this one — veterans benefits).
Naturally, I still have a complaint. Broder writes that
The worse news, documented in the second report, is that these cuts will not even begin to deal with the looming calamity of runaway entitlement spending on the retirement and health care costs of the baby boom generation.
…Medicare and Social Security benefits for the huge wave of boomers, who start to turn 62 in just three years, make the current budget policies “unsustainable” for the long term.
Broder employs a common sleight of hand by not actually saying that Social Security is heading towards bankruptcy (it’s not), but rather twice saying that Medicare and Social Security are in real trouble. The latter statement is technically true, but only because of the dour projections for Medicare costs, which Bush’s policies have exacerbated, not addressed. Let’s turn to honest conservativeTM Bruce Bartlett:
The Financial Report of the U.S. Government for fiscal 2004, released just before Christmas, says the unfunded liability of the Social Security system is $12.5 trillion, an increase of $810 billion over the previous year. However, the Medicare deficit is twice that: $24.6 trillion, a rise of $9.6 trillion from 2003.
In other words, in just a single year, the unfunded liability of Medicare increased by three-fourths of Social Security’s total deficit. Yet instead of reforming Medicare, which is hemorrhaging money, we are talking only about Social Security, which is in sterling financial shape by comparison.
Indeed, not only are we not talking about reining in Medicare’s exploding costs, we are preparing to make them much worse. Next year, the new Medicare drug benefit is fully effective, which will drive up Medicare spending sharply. This is the reason for the rise in its unfunded liabilities. Medicare’s trustees estimate the long-term cost of the drug benefit at $8.1 trillion, accounting for the bulk of its increased liabilities last year.
So no, Broder isn’t actually lying when he says that Social Security and Medicare “make the current budget policies ‘unsustainable’ for the long term.” But he’s only being honest in the same sense in which the following statements are true:
- The Defense Department and Medicare are ‘unsustainable’ for the long term.
- The Transportation Department and Medicare are ‘unsustainable’ for the long term.
- The Department of Homeland Security and Medicare are ‘unsustainable’ for the long term.
- Bill Gates, Warren Buffet, George Soros, the Waldens, Michael Dell, Jeff Bezos, and Medicare are ‘unsustainable’ for the long term.
- Goldman Sachs, JP Morgan, and Medicare are ‘unsustainable’ for the long term.
And of course, Medicare is not necessarily ‘unsustainable’ for the long term, but its finances are in bad shape, as Bartlett described. Moreover, the Bush administration willfully conflated Medicare and Social Security in order to allege a crisis where none existed (Social Security). At the same time, the administration pushed through a bizarrely crafted drug benefit, thereby exacerbating the problems of the program that actually had, and continues to have, ‘sustainability for the long term’ issues. Astounding!
In fairness to Broder, he almost pulls out a save in the last two paragraphs:
… Reform of these major entitlement programs [Social Security and Medicare] is the pressing need to avoid a budget train wreck in the next generation, but Bush has offered little leadership on that. His Social Security plan — for individual savings accounts — does nothing to address the shortfall in that system. And his “contribution” to solving the more pressing crisis in Medicare has been to add an unaffordable prescription drug benefit to the program.
It is a sorry record for a conservative administration, and we are just beginning to recognize its price.>
While not actually correct, this is more right than wrong. Broder is wrong in that reforming just Medicare but not Social Security would avoid a budget train wreck in the next generation. But he’s correct that Bush’s SS plan does not address the (modest) SSRI shortfall, that the administration made the Medicare problem worse with its prescription drug plan, and that it’s a sorry record for a conservative administration. (Were I a nitpicker, I’d point out that it’s a sorry record for any administration.)