Four Uncomfortable Questions For Budget Debate
Posted on April 16, 2009
(CNN) -- I was talking to a close family friend during my vacation in Florida, and he was criticizing the governor there for taking the stimulus money that came from the federal government."Florida should just cut government spending, and not use the Feds as a crutch," he said with great vehemence.
Now, this family friend is not a wealthy guy, but he lives a comfortable life, made more comfortable by the fact that he gets a nice monthly pension check from the state. I didn't dare suggest to him that perhaps cutting back on his monthly pension might be one way to cut that spending, because if I had, I would have had a seven-iron flying at my head.
But what is most interesting to me about that conversation is how the attitude of this family friend reflects the attitudes of most Americans. Cut government spending, but don't touch my piece of the pie, the many cry out as one.
As federal policy makers grapple with the budget next week when Congress reconvenes, I challenge them to answer four uncomfortable questions that could bankrupt the country if unanswered:
First, why do we let people retire too early and then expect them to live so long without working? In 1910, the average retirement age in the United States was 74. In 2002, however, the average retirement age was 62. Average life expectancy in 1910 was around 55, while in 2002 it was 77.
Throughout most of our nation's history, people were expected to work regardless of their age. Only over the last several decades has that changed.
Now it is assumed even if you are completely able-bodied and able-minded, you don't need to work and indeed you shouldn't be required to do so if you reach a certain age and certain number of years at one job. But that is crazy. We can't afford it. As people live longer, they should work longer, be productive longer, pay taxes longer, and be full participants in our nation's economy longer.
Second, why do most Americans spend so much of their health care expenditures in the last three months of their life? Fully 27 percent of Medicare is devoted to spending on end-of-life health (in other words, health care that doesn't work), according to the Journal of the American Medical Association.
According to a Mayo Clinic study, "Older people with chronic illnesses have the highest rates of intensive-care-unit (ICU) use at the end of their lives. The country's aging population has an increased prevalence of chronic diseases, signaling that ICUs may treat more and more people in the years ahead. Intensive care costs comprise 30 to 40 percent of hospital spending and may continue to grow as the population ages."
In other words, we are paying a lot of money for health care that ends up with the patient dead. If we want to keep from going bankrupt, we have to have a more rational way to look at end-of-life care.
Third, why do so many people pay nothing in federal income taxes? According to the Tax Foundation, fully 32 percent of all Americans pay no federal income taxes while 42 percent of single Americans pay no federal income taxes. With President Obama's aggressive efforts to give more money to more Americans through tax credit refundability, many experts expect that over half of the people will owe nothing or may get back some money from the federal government.
Ironically, this trend started under George W. Bush, the president who supposedly ignored the poor. But taking so many people off the income tax rolls has two unfortunate consequences. First, it brings less revenue in to pay for a government that is already teetering on bankruptcy.
Second, it makes wholesale tax reform more difficult. Hey, if I ain't paying any taxes under the current system, why should I want to change it? But at some point in time, squeezing the so-called rich will become counterproductive to economic growth, and the pie will start to shrink. It is not fair that so many Americans pay nothing in income taxes to their government.
Fourth, why is it more profitable to work in the government than to work in the private sector? According to one study, public employees earned benefits worth an average of $13.38 an hour in December 2008, while private-sector workers got benefits worth $7.98 an hour. Overall, total compensation for state and local workers was $39.25 an hour, $11.90 more than in the private sector.
Democrats will argue this calls for more mandates from the government to increase the minimum wage. What it actually means is that government workers, who are paid by the taxpayers, are vastly overpaid, and with their benefits and their pensions, are risking the financial health of this country.
When Congress reconvenes next week, the talk will center on President Obama's budget, his plans to increase taxes on the wealthy and his ambition to spend more money on bigger government on programs that we can't afford. Let's hope that some courageous politicians somewhere will have the wherewithal to ask these kinds of uncomfortable questions so we can have an honest debate about what is really driving our nation over the cliff, fiscally speaking.
The opinions expressed in this commentary are solely those of John Feehery.