Handing a huge debt to kids
It’s rich with irony: AARP, which is more responsible than any single group for the huge disparity in federal spending between seniors and children, is now taking out ads against President Bush’s Social Security reforms urging, “Let’s not stick our kids with the bill.”
Then again, we have Bush, who regularly defends his reforms on the basis that “leadership means not passing problems on to future generations and future presidents.”
But Bush has already passed on to future generations the cost of his tax cuts — $5.7 trillion over 20 years, if they are made permanent — and his Medicare prescription drug benefit. His Social Security reforms would add $6 trillion over 20 years.
The fact is this generation’s policy activists and political leaders — Democrats and Republicans — have piled enormous burdens of debt on today’s children and their children. There’s precious little sign they plan to lighten it.
According to a 2000 report by the Congressional Budget Office, the federal government then was spending roughly $17,000 on each senior, mostly in retirement programs, and $2,500 on each young person under 18.
AARP correctly points out that beneficiaries of Social Security and Medicare have paid premiums into those programs, so they can’t be compared exactly to ordinary federal spending programs.
And states spend far more on young people — particularly for education — than they do for seniors. Still, retirees typically get far more in benefits than they ever paid in premiums. And the fastest-rising state expenditure is for Medicaid, which pays nursing home costs for indigent seniors.
Moreover, the gap between kids and seniors will get even wider when the Medicare prescription drug benefit kicks in next year at an annual cost of more than $50 billion. And when the baby boomer generation retires, starting in 2008, it will become enormous.
“Unsustainable” is the term used by every respected analyst for the burden that today’s young people and their children will have to bear to pay retirement benefits — especially medical benefits — for the baby boomers.
The way the Congressional Budget Office (CBO) put it in December 2003 was that “unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt … would have a corrosive and potentially contractionary effect on the economy.”
Bush has decided to tackle the Social Security piece of the long-term deficit problem. He’s expected to suggest a plan combining voluntary private savings accounts for younger workers and cuts in the basic benefit guarantee that will make Social Security solvent after 2050.
Neither Bush nor Democrats are systematically addressing the biggest contributor to the long-term debt burden: surging health costs. By 2040, Medicare and Medicaid could cost more than 20 percent of GDP — an amount equal to the entire federal budget today, including defense.
So, when Bush says that today’s Americans must act to secure the future for their children, the most charitable retort will be, “Yes, but what about …”
Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.