Heads exploded today LGM in response to Robert Samuelson's latest column on Social Security and Medicare, "Let Them Go Bankrupt, Soon." Why bankruptcy? These entitlements are inevitably insolvent and thus fundamentally unsustainable:
When the trustees of Social Security and Medicare recently reported on the economic outlook for these programs, the news coverage was universally glum. The recession had made everything worse. Social Security, Medicare face insolvency sooner, headlined The Wall Street Journal. Actually, these reports were good news. Better would have been Social Security, Medicare risk bankruptcy in 2010.Samuelson's argument isn't that controversial, actually. Talk of the entitlement "time bomb" is not new. That policymakers keep kicking the can down the road is irresponsible, if unexceptional. It currently takes taxpayer contributions from 2.5 workers to finance the Social Security benefits of one recipient. In 40 years we'll have only two workers supporting one retiree. The facts are staring us in the face. I teach social policy every semester. According to George Edwards, in his non-partisan textbook, Government in America (2008):
It's increasingly obvious that Congress and the president (regardless of which party is in power) will deal with the political stink bomb of an aging society only if forced. And the most plausible means of compulsion would be for Social Security and Medicare to go bankrupt: trust funds run dry; promised benefits exceed dedicated payroll taxes. The sooner this happens, the better.
That the programs will ultimately go bankrupt is clear from the trustees' reports. On pages 201 and 202 of the Medicare report, you will find the conclusive arithmetic: over the next 75 years, Social Security and Medicare will cost an estimated $103.2 trillion, while dedicated taxes and premiums will total only $57.4 trillion. The gap is $45.8 trillion. (All figures are expressed in "present value," a fancy term for "today's dollars.")
About 75 million baby boomers will start retiring in about 2010. Chances are, they will live longer and healthier lives than any generation before - and run up even bigger costs for the Social Security system and its health care cousin, Medicare ... There are some - President George Bush is among them - who think Social Security needs reform. It is a time bomb, most experts think, ticking away, moving inexorably toward the day when the costs will exceed income ...The text notes that at some point, likely 2038 (one year later than Samuelson's estimate), expenditures will exceed payouts, and the government will have to siphon increasingly large amounts of funding from other federal programs to cover the deficit.
But that's just my textbook, written by some of the most prominent political scientists in American governmental studies. They can hardly be attacked as embarrasing "hacks," as is Samuelson by Scott "Social Scientist" Lemieux.
But for good measure, let's check in with Daniel Shea, another political scientist who's got a brand-new textbook out, Living Democracy:
Everyone talks about the crisis that is coming to Social Security and Medicare - is it real? Left unchecked, spending for Social Security will account for 6.4 percent of GDP by 2050, and Medicare and Medicaid will use a combined 21.9 percent, for a total of 27.3. Over the past fifty years, total government spending has averaged 18.5 percent of GDP. What this means is that by 2050, these programs will absorb 150 percent of average government spending without appropriating a penny for food stamps, defense, science, space exploration, or anything else - including interest on the federal debt, which is projected to average 2 percent of GDP in coming years.As you can see from mainstream political analysis, Robert Samuelson's hardly an extremist on Social Security and Medicare. But Scott "Social Scientist" Lemieux's too blinded by his own ideology - and too economically illiterate - to know better. It's no coincidence that Lemieux is joined by Bruce Webb at Angry Bear, "Hacktackular! Samuelson on Social Security."
Something's got to give. You can't run an annual deficit equal to 18 percent of GDP without wrecking the economy. Solving this problem will require either huge tax increases or huge benefit cuts - or some combination of the two. With our aging workforce, this seems to foreshadow some sort of generational conflict, and conflict that might be eased in part if the immigration of working-age foreign-born people continues to surge and more of them become legal, Social Security-paying workers. Boston University economist Laurance Kotlikoff and financial columnist Scott Burns have called this confluence of more retirees and fewer workers "the comuing generational storm" ....
This generational storm is still decades down the road and may break just when you are ready to retire ...
But as this essay shows, the genuine "hacks" are those idiots in the left-blogosphere who claim to know something about entitlements, but only end up showing their abject incompetence in addressing complicated policy issues requiring something other than, er, partisan hackery.