October 29, 2003
Will Any Democrat Dare to Propose Entitlement Reform?
By Mort Kondracke

Democrats blast President Bush for ballooning federal deficits, but their no-cuts, no-reform stance on Social Security and Medicare threatens the nation's economic future at least as much as his tax cuts.

Former Vermont Gov. Howard Dean had been an exception to that rule, advocating reining in the growth of entitlement programs. Now, under pressure from his presidential rivals, he's ruling out any reforms.

Des Moines Register political columnist David Yepsen told me that Rep. Richard Gephardt's (Mo.) attacks on Dean's past advocacy of entitlement restraint are "definitely a factor" in Dean's apparent "plateauing" in Iowa, where 74 percent of the state's caucus participants will be more than 50 years of age.

Gephardt, touting the fact that he has opposed all efforts to "cut" entitlements, even those proposed by former President Bill Clinton, has moved into a slight lead over Dean in Iowa polls.

In 1993, Dean declared that Medicare is "one of the worst things that ever happened, a bureaucratic disaster," apparently reflecting a frustration that many doctors express over delayed and inadequate reimbursements.

In 1995, Dean supported a GOP plan to reduce the growth of Medicare by $270 billion over seven years - a move that other Democrats denounced as a "cut." He also supported more managed care for Medicare and requiring some Medicare recipients to pay a greater share of the cost of their medical services. And, he said, "the way to balance the budget is for Congress to cut Social Security, move the retirement age to 70, cut defense, Medicare and veterans pensions. ... It would be tough, but we could do it."

Confronted with his statements, Dean at first tried to deny he'd made them. Then, he tried to explain them.

In September, he defended himself by saying, "I did support slowing the growth of Medicare. And I think that was a good thing." He also aligned himself with Clinton, who he said had signed a balanced budget agreement in 1997 that reduced Medicare growth by $250 billion over five years (though at the time it was estimated at just $125 billion).

But that's all changed now. Even though the federal deficit is officially estimated to be $1.4 trillion over the next 10 years - but will be more like $5 trillion, according to the Concord Coalition - Dean has reversed himself on the need for entitlement reform and cost controls.

A Dean spokesman, Jay Carson, told me that "the governor has been very clear, despite all the distortions of his position, that cuts for Medicare are off the table. They are not an option." And, "there will be no Social Security cuts and no increase in the retirement age."

Dean can be legitimately criticized for fibbing about his past statements, for accusing those who mention them of "going negative" when he's done the same to them and, ultimately, of totally changing his tune.

But, when it comes to addressing the nation's long-term fiscal crisis, he's now just one of the Democrats. None of the candidates wants to control Medicare's growth or reform Social Security.

Gephardt is especially proud of the fact that he's resisted all entitlement spending controls, including Clinton's 1997 budget agreement.

Moreover, all of the Democratic candidates advocate not just creating an expensive new Medicare prescription drug benefit - Bush is for it, too - but also a high-priced guarantee of insurance coverage for the uninsured.

These new initiatives certainly are meritorious, but if the nation is to avoid a fiscal abyss as the baby boom generation retires, entitlement reform also is necessary.

Persons over 65 now make up 21 percent of the population. That will increase to 35 percent by 2030 and 42 percent by 2075. The number of workers paying payroll taxes for each retiree is now 3.7. In 2030, it will be 2.4 and in 2075, only 2.0. Without reforms, the burdens will be intolerable.

The mantra of Democrats - now including Dean - is that the Medicare and Social Security trust funds will be "solvent" until 2026 and 2042, respectively.

In fact, the funds begin to pay out more than they take in much sooner - around 2016. The later dates are when the funds go totally broke. Instead of contributing surpluses to the federal budget, Medicare and Social Security taxes will have to supplemented with ever- increasing - and ultimately immense - contributions from income tax revenues.

In chilling testimony before the Senate Aging Committee in July, Social Security trustee Thomas Saving said that to maintain current benefits, by 2025 Social Security and Medicare will use up 28 percent of all federal income tax revenue and 47 percent by 2040.

"Clearly, elderly entitlement programs are out of control," he said. "If nothing is done, by 2060, the combination of Social Security and Medicare will account for more than 71 percent of the federal budget," double today's level. Bush and all Democratic candidates say that spurring economic growth is the way out of the nation's fiscal woes. Bush's formula is tax cuts. The Democrats' answer is tax increases.

History suggests that Bush's solution, even if his cuts are excessive and skewed toward the rich, is the more likely to work - especially since the Democrats want to spend every cent they collect.

The Concord Coalition estimates that Bush's tax cuts will be responsible for 36 percent of an estimated $9 trillion deterioration in the nation's 10-year budget outlook since 2001. But unreformed Medicare and Social Security will put a $24 trillion burden on future generations in the next 75 years - not counting the cost of a Medicare prescription drug benefit.

Bush wants to partially "privatize" Social Security and Medicare. Democrats adamantly oppose that. They also oppose means-testing benefits and raising the retirement age. The question is: Besides raising taxes, what are they for?

Mort Kondracke is the Executive Editor of Roll Call.