We Need True Entitlement Reform—Now

By Matt Kibbe
Friday, June 03, 2011

We cannot solve our nation’s financial problems without addressing the growth of entitlement programs. Medicare, Social Security and Medicaid are the largest and fastest growing part of the federal budget. If present trends continue, these three entitlement programs are expected to consume the entire federal budget by 2050. The U.S. government has just hit its statutory debt limit of $14.3 trillion. The official national debt figure does not reflect what the federal government has promised to pay Americans in entitlement benefits later on. In reality, the true national debt is actually as high as $119.5 trillion when the unfunded liabilities of Medicare and Social Security are factored in. The U.S. government will never balance the budget without tackling entitlement programs head on.
We’ve been warned about the coming entitlement meltdown for many years. The Congressional Budget Office (CBO) warned in 1995 that “if we do not plan for the future, entitlement spending promises will exceed federal resources in the next century. The current trend is unsustainable.” In the sixteen years since the CBO’s warning, Congress has only enlarged our entitlement system. The time for bold reforms to entitlement programs is now. Simply tinkering with the entitlement system won’t cut it. We must face the reality that the federal government won’t be able to keep its entitlement promises in the future.

The number of younger taxpayers for each retiree has continued to decline. When the Social Security Act of 1935 passed, life expectancy was approximately 58 years for men and 62 years for women. Most people did not live long enough to collect entitlement benefits at the age of 65. Americans’ life expectancy has surged over the past seven decades. Life expectancy today is roughly 75.5 years for men and 80.5 for women. Despite the fact that Americans live 30 percent longer on average, the Social Security retirement age has never changed. Social Security was not originally designed to subsidize retirees for a third to a half of their adult lives.

Massive entitlement programs have been enacted while both parties were in control. A Republican controlled Congress passed Medicare Part D in 2003 and a Democratic controlled Congress passed ObamaCare in 2010. FreedomWorks (then Citizens for Sound Economy in 2003) actively opposed both unconstitutional pieces of legislation. Former House Majority Leader Dick Armey, then co-chairman of Citizens for a Sound Economy, wrote in December 2003, “this Medicare bill is misguided and will ultimately do more harm than good. Unfortunately, the end result will be that many seniors will have fewer choices and will end up losing their existing drug coverage.” Medicare Part D adds nearly $16 trillion to our national debt and will cost taxpayers one percent of Gross Domestic Product (GDP) by 2030. Former U.S. Comptroller General David Walker has called the unfunded prescription drug benefit “the most fiscally irresponsible piece of legislation since the 1960s.” If lawmakers are indeed serious about addressing entitlement programs, they will propose repealing ObamaCare as well as Medicare Part D.

The American people are waking to the impending entitlement crisis. Until recently, reforming entitlement programs was a taboo subject in Washington. With the rise of the Tea Party movement, our nation’s long-term debt problem is finally getting the attention it deserves. Last November, the American people elected outspoken supporters of entitlement reform such as Rand Paul, Pat Toomey, Ron Johnson and Marco Rubio to the U.S. Senate. A FreedomWorks poll conducted by Frank Luntz found that 88 percent of Americans believe Social Security needs to be reformed immediately. One cannot be serious about cutting spending without touching entitlement programs that are the main reason for the huge increase in debt to GDP ratio.

I applaud House Republicans for taking the lead to restructure entitlement programs. None of their plans are ideal from a limited government standpoint. The Obama administration and Senate Majority Leader Harry Reid (D-Nev.) however, have yet to introduce any plans to reform or cut entitlement programs. Ignoring the problem won’t make it go away. It’s only going to get worse if lawmakers refuse to do anything to avert the coming fiscal disaster. The Paul Ryan budget plan would convert Medicaid into a block grant system for the states and transition Medicare to a voucher program that increases consumer choice. It’s just a first step to restore fiscal sanity and should be considered a win for the Tea Party movement. We still have a long way to go. The American people are getting serious about entitlement reform but many lawmakers still lack the political courage.

The underlying problem is the role of government in society. Our current welfare state is the antithesis of freedom. Many of us have grown dependent on the government to “take care” of us from cradle to grave. It would be cruel to abolish the welfare state overnight due to the record number of Americans dependent on government programs. We need immediate solutions to minimize human suffering while averting fiscal calamity. Lawmakers ducking entitlement reform now will only condemn future generations to insurmountable debt and despair.