Beyond Fear and Anger

Eakinomics: Beyond Fear and Anger Fear and anger are among the most powerful campaign forces. Recently, Democrats have attempted to make Social Security a midterm election campaign issue of the fear and anger variety. CNBC quotes the head of the Social Security Works Political Action Committee as saying: “There’s been a Republican Party offensive during this cycle against Social Security.” That is far from true – there have been no broad Republican platform commitments and only two senators have made specific proposals. Democrats have proposed nothing on Social Security. The leading legislative proposal is from Congressman John Larson, whose Social Security 2100: A Sacred Trust would substantially raise taxes and offer greater benefits. As is typical of recent legislating, the bill would make the benefit expansions temporary. The idea that any new benefit under Social Security would be temporary is so comically absurd, it’s a wonder Microsoft didn’t try to autocorrect the bill text. The kicker of course is that assuming these “temporary” benefits are permanent, instead of extending Social Security’s solvency, the bill would actually advance the date of the Social Security Trust Funds’ exhaustion by a year. The goal of the Democrats’ PR offensive is simply to make people afraid for their Social Security and angry about attempts to reform it. That’s a shame because there is a real issue here. When the CBO released its Long-Term Budget Outlook to exactly zero fanfare in July, it made quite clear that the federal budget is going to hell in a handbasket*. Some of the key features are in the chart (below). Shown in blue (and measured on the left axis) is federal debt in the hands of the public as a percent of gross domestic product. Mechanically, the federal budget is on track to enter an unsustainable debt spiral. This is driven (in orange, right axis) to a great extent by spending on Social Security and federal health programs – Medicare, Medicaid, Child Health Insurance Program, and Affordable Care Act subsidies. As a bonus, the Medicare Hospital Insurance Trust Fund will be exhausted inside of a decade and the Social Security Trust Fund by 2035. In short, the programs are in danger of failing their beneficiaries, their fiscal impacts are the driving source of federal red ink, and the federal debt endangers the future of the United States. Reforming Social Security and health spending is necessary to getting control of the federal debt. Reforming Social Security and health spending is necessary to restore these programs as a source of security and not a fount of financial risk. Reforming Social Security and health spending is a moral obligation to current retirees and the next generations. If politicians want to talk about Social Security and health programs, that is what they should be talking about. *Eakinomics September 1 Bonus: Per Google, that phrase has been found associated with the American gold rush of the 1840s where men were lowered by hand in baskets down mining shafts to set explosives which could have deadly consequences. Seems appropriate for an exploding debt spiral.