How About a Freeze in Entitlement Spending?
Posted on February 2, 2010
How About A Freeze on Entitlement Programs?
The President’s budget yesterday included a much-maligned three-year freeze on discretionary spending. Of course, that carried with it a bunch of caveats. It had to be non-defense discretionary spending (which raised the hackles of the always dovish Speaker Pelosi). It couldn’t include homeland security spending (which could include just about anything). And it had so many other holes, that the total budget impact would be about fifteen billion dollars, which in a three trillion dollar budget wouldn’t have much of an impact.
As anybody who has spent some time on Capitol Hill understands, discretionary spending is an ever-declining portion of the overall budget. Most of the budget is allocated for entitlement spending, with a growing percentage of the budget going to pay for the interest on the debt.
Discretionary spending is kind of like spending for the health club, cable, the home alarm system, clothes, and restaurants in a family’s budget. Mandatory spending is the money that goes to pay for rent (or the mortgage), the utility bills, health insurance, and taxes. Interest on the debt is well, like interest on the credit cards.
The biggest entitlement expenditures come with Medicare and Social Security. For all of you old people out there, I know you think that Social Security is a sacred trust, and that you paid in all of your lives and you damn well better get your money back. I know, I have heard it before, from my own family.
But the fact of the matter is that most people get a lot more money out of Social Security than they ever put in. The folks who are going to get screwed are the younger Americans who are paying in now and having little chance in seeing us solvent enough in the future to make up the difference.
But for older set, that is not their concern. Their concern is to get their money back and then some, because they were told that Social Security was a sacred trust, and the long term financial health of this country is something to worry about far into the future, and not now.
David Brooks had a fascinating column today in the New York Times about old people. His point is that getting older ain’t so bad, and that you can teach old dogs new tricks. As he put it: “Older people retain their ability to remember emotionally nuanced events. They are able to integrate memories from their left and right hemispheres. Their brains reorganize to help compensate for the effects of aging. A series of longitudinal studies, begun decades ago, are producing a rosier portrait of life after retirement. These studies don’t portray old age as surrender or even serenity. They portray it as a period of development — and they’re not even talking about über-oldsters jumping out of airplanes. People are most unhappy in middle age and report being happier as they get older. This could be because as people age they pay less attention to negative emotional stimuli…”
Of course, that happiness could also be because older people don’t work as hard or as much, because they get their Social Security checks on time and they get most of the medical care paid for by the government.
But, as I have said in the past, we can’t afford to have people retire at age 62 if they are going to live until they are 92. It is bad for our fiscal health, it is bad for the mental health of retirees, and it is bad for this country if we are not tapping into the talents and the experience of our oldest citizens.
When I wrote about this in a CNN.com column last year, I had several people email me that they wanted to work, but once they got close to sixty, companies made them take early retirement and then they couldn’t find another job.
Well, if that is the case, and I strongly suspect that it is, we must change the laws to make firing on the basis of age more difficult. We also must find ways to get older Americans back in the work force doing the things they love to do.
I doubt it is feasible to actually freeze entitlement spending for three years, but we should find out if it is. My friend Billy Pitts always talks about finding greater efficiencies in entitlement spending by establishing error rates and then ratcheting down on them on a yearly basis. Sounds good to me.
But I bet that if you said to the country, “ok folks, we are going freeze spending on the entire budget for one year”, there wouldn’t revolution in the streets. There would be some real discomfort, sure. But such an action would inspire agencies at all levels to find some true efficiencies, especially with Social Security and Medicare, which is where our biggest long-term financial problems can be found.
And one of the ways we have to come to grips with our long-term fiscal picture is to change the way we look at old age in this country. People shouldn’t be expected to do nothing from the ages of 65 to 85. They do better and we will do better as a society if they have something to do in the golden years.