For months, weve been hearing about the need for an adult conversation about the federal budget and the national debt. Unless we have this conversation, establishment opinion insists, the entire American economy will collapse, our social fabric will be rent asunder, and then well really be sorry. Its imperative that the conversation start forthwith.
Republicans and Blue Dog Democrats want to have this conversation; theyve been adults for years. Wall Street financiers and corporate CEOs want the conversation; theyre adults, too. President Obama and his economic advisors want the conversation as well, although theyre more circumspect about it, given that much of their political base consists of, shall we say, non-adults. Most of all, the Beltway commentariat, the media people who know whats best for us, want the conversation; they pursue it incessantly like dogs worrying a bone.
This begs the question of what exactly defines an adult in this conversation we need to have. A true adult, as nearly as I can determine it, is someone who knows that the long-term debt and deficit constitute the one, the only, the existential threat of our time, a problem far more urgent than joblessness or the stagnant economy or the housing crisis or the collapsing infrastructure. An adult, moreover, is someone who understands the need to address the problem almost exclusively by cutting government spending, especially unsustainable entitlement spending. An adult, in short, is someone who appreciates that austerity is good for the body politic, economically, socially, and morally.
If you dont subscribe to this adult regimen, if you suspect it might not be in your or the nations best interest, then (sorry) youre not an adult; youre a child. You should be seen, but not heard. You should grow up, or alternatively, sit down and shut up. The adults will take it from here.
In May, news that the Social Security and Medicare trust funds would be depleted one and five years earlier, respectively, than previously estimated, according to program trustees, was hailed by the self-appointed adults as proof of their prescience. Treasury Secretary Timothy Geithner, chairman of the trustee panel and a certified adult, was a whirlwind of righteousness. The trustees annual report confirmed, he said, the need for immediate action.
Geithner, the presidents chief economic advisor and sounding board, observed that by acting quickly Congress could impose entitlement changes that wouldnt hurt current beneficiaries and (heres the operative adult phrase) would give future retirees time to prepare. In Geithners exact words, Larger, more difficult adjustments will be necessary if we delay reform, and making reforms soon... would help reduce uncertainty about future retirement benefits. Translation: Those under a certain age had better not plan on having Social Security and Medicare precisely as we have known it, because in this context, reform is code for benefit reductions.
Geithners comments mean that the Obama administration is not planning to go to the wall in defense of existing entitlements; its planning to compromise with Republicans on cutting them. The surest bet is whatever the Senates reconstituted Gang of Six (now five) comes up with probably some variation of the conservative Simpson-Bowles deficit commission plan.
We wont get the wildly extremist Ryan proposal of the House GOP; that was a distraction, an effective stalking horse for the real adult proposal. The likely scenario will see the responsible adults of the Democratic party move rightward to meet the more intractable adults of the Republican party halfway in one of those familiar bipartisan compromises that gives the GOP much of what it wants.
Time for a brief reality check. The alarmism expressed by Geithners trustee panel ignores the continued solvency of Social Security through 2036 and of Medicare through 2024, 25 and 13 years from now, respectively. Moreover, these latest projections are nothing more than statistical snapshots in time; the outlook could be much improved in a few months, when the panel next reports. In addition, no one knows what the world will look like decades down the road. To put things in perspective, 25 years ago, we were in the midst of morning in America, and 13 years ago the nation was experiencing the Clinton-era boom; nobody foresaw the coming Great Recession.
The Geithner panel ascribes its gloomy entitlement-funding outlook to the weak economy specifically, fewer people working and paying payroll taxes to finance the system. That in itself puts the lie to the hysteria of the adult hypothesis, since the economy is presumably in recovery. If so, economic growth will solve the entitlement dilemma; if not, thats the fault of those in government charged with producing jobs, who would rather put their energies into the less demanding task of budget reduction instead.
The crux of the situation, broadly stated, is this: the leadership of both major political parties, to greater or lesser degrees, is captive to the corporate establishment and its low-tax priorities. This is why, despite the recent overwhelming mandate by voters of New Yorks 26th Congressional District in favor of keeping Medicare as it is, the Obama administration persists in its dogged search for a bipartisan entitlement fix that would avoid such budgetary unpleasantries as foregoing a corporate income-tax reduction or rolling back all the Bush tax cuts, including those affecting high-end investment incomes and inheritances.
The public, however, has spoken in poll after poll. Its message: leave Social Security and Medicare alone, and find other ways to address the long-term debt. By following Congressman Ryan lemming-like over the political cliff, ideologically obsessed Republicans have handed Democrats a winning issue for 2012 a ticket to reclaiming Congress but Democrats appear determined to fritter it away in pursuit of so-called entitlement reform.
Of course, theres good reform (negotiating reduced Medicare drug prices or raising Social Securitys payroll-tax cap), as well as bad reform (postponing entitlement eligibility or lowering retirement COLAs). But why not draw a clear, unambiguous political line and protect entitlements by old-fashioned revenue enhancement? The apparent answer is that Democratic leaders are encased in the Beltway bubble and dont hear public opinion, just the persistent, piped-in buzz of the adult conversation.
Post-Ryan, the threat to the entitlement system is being kept alive by its supposed friends. Imagine raising taxes on the actual owners of the country. How uncouth! The adults know better.
Wayne OLeary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two books.
From The Progressive Populist, August 1, 2011
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