February 21, 2006
Republicans Sell Out on Entitlement Reform
By Bruce
Bartlett
One of the more amusing
lines in President Bush's State of the Union Address last month
was his call for yet another commission to study the problem of
entitlement spending. Entitlements are programs that do not require
annual appropriations. The money is paid out automatically to
anyone who meets the eligibility criteria. Spending cannot be
capped because people have a legal right to their benefits. Hence,
spending for entitlements can only be reduced by changing the
basic law applying to Social Security, Medicare and Medicaid.
There are two reasons why the Bush proposal cannot be taken seriously.
First, he has shown contempt for the whole idea of federal commissions.
He appointed a Social Security commission early in his presidency,
which produced a solid, credible report. But its work was utterly
ignored when Bush started his failed Social Security reform effort
last year. A key reason for that failure, I believe, is that the
effort was all speeches and sound bites, with no substance --
not even a formal proposal that could be studied and analyzed.
More recently, Bush
appointed a tax reform commission. It spent most of 2005 holding
hearings and issued a report with options for fundamentally restructuring
the income tax. Members of the commission assumed that he would
announce a tax reform proposal in the budget or State of the Union
Address. They were deeply disappointed that Bush simply ignored
their work. According to press reports, he didn't even thank the
commission members for it.
Given this history,
it's hard to believe that people of stature will waste their time
on yet another disposable commission report, especially when everyone
knows that there is not enough time left in this administration
to do much of anything meaningful. According to press reports,
former Federal Reserve Chairman Alan Greenspan, who chaired a
successful Social Security commission in the early 1980s, politely
turned down the opportunity to chair this new commission.
The second reason
why Bush's call for an entitlement commission is laughable is
because he is largely responsible for the growing crisis of entitlement
spending. That is because he rammed a vast expansion of Medicare
through a Republican Congress in 2003 that increased the unfunded
liability of that program by almost 40 percent. According to Medicare's
trustees, the unfunded liability of Medicare is $68.1 trillion.
Of that, $18.2 trillion is accounted for just by the new drug
benefit.
By contrast, the
unfunded liability of Social Security is just $11.1 trillion.
This means that we could repeal the drug program, fund Social
Security forever with no benefit cuts or tax increases and still
cut $7 trillion off the national debt.
Historically, Republicans
have opposed the creation of new entitlement programs because
they always cost vastly more than estimated and they are so extremely
difficult to control. The cost of the original Medicare program,
for example, was seven times higher by 1980 than projected in
1965. And because the elderly, the primary beneficiaries of entitlement
spending, are so politically powerful, only the bravest politician
will even think about cutting their benefits. It's easier to try
to take food out of the mouths of hungry rottweilers.
It would be one thing
if Republicans had won major reforms to the Medicare program as
their price for the new largess. But no meaningful reforms were
contained in the final legislation, in large part because early
on Bush announced his intention to sign any bill, no matter what
was in it. In the end, the Medicare drug program was enacted for
one reason and one reason only: Republicans thought they were
buying the votes of the elderly for re-election. That's it.
Thus it is ironic
that Republicans have garnered virtually no political support
from this fundamental sellout of their principles. In part, that
is because implementation of the drug program has been plagued
by snafus. Seniors have had difficulty figuring out the program,
many have lost drug benefits they previously had, and the states
have been forced to spend millions to cover gaps in the program
for elderly Medicaid patients, among other things.
So it comes as little
surprise that surveys have found seniors turning against Republicans
for the very benefit that was designed to buy their votes forever.
According to a new poll from the Democracy Corps, only 25 percent
of those over age 65 favor the drug program, with 53 percent rejecting
it. This may explain why Bush neglected to tout it in his State
of the Union Address.
There is little doubt
that the drug benefit would fail if it came up again in Congress.
I believe that Republicans would probably be better off politically
if they had enacted a much smaller, less expensive and more targeted
program. If they had simply done nothing, I don't think they would
be any worse off.
Copyright
2006 Creators Syndicate
