What’s a supercommittee to do? Total national debt just hit a new record at $15 trillion, an increase of approximately $700 billion since the Supercommittee’s August inception. Hard as its members try, they just do not seem to be able to deliver the required $1.2 trillion in deficit reduction measures. The situation has deteriorated so badly that even some Republicans are offering up tax hikes. While this is precisely the wrong solution, it has created another insidious problem. Squabbles over the size of tax hikes are overshadowing the more vital issue: Getting federal spending under control.
Federal spending, at about 24 percent today, is significantly over the average of 20 percent of GDP, but in a decade it will top 26 percent. Within a generation it will reach nearly 35 percent of GDP. Before the end of the decade taxes will have recovered from their recession driven levels and will continue to rise thereafter. Yes, Supercommittee, it’s a spending problem.
So where are the spending cuts? What will the Democrats accept? Pathetically, nothing that will even begin to alter the crushing spending path the nation is on today, as they have said:
- No to increases to the Medicare retirement age (actually the retirement age should be raised for both Social Security and Medicare.)
- No to changes in the measure of inflation (eg chained CPI) used to calculate entitlement benefits including Social Security.
Sadly, there are few additional changes on the list for them even to react to – and their so called bold changes from several weeks ago have all but dried up. The Democrats’ intractable attitude on entitlement reform defies logic. The facts are simple, entitlements are going to generate European style debt levels unless they are reformed. Paying for it without bringing down their spending would require constant, crushing tax hikes on all taxpayers – not just the top 1 percent.
The major entitlement programs – Social Security, Medicare and Medicaid – already comprise 40 percent of all federal spending. But they are going to explode as the 78 million babyboomers retire, eventually crowding out all other spending. Entitlement reform is more urgent than any other deficit reduction priority for the Supercommittee.
Harry Reid, Nancy Pelosi and President Obama must tell the nation what entitlement reforms they will actually accept. They must be serious reforms like moving to a premium support system for Medicare. Or moving Social Security to a simpler benefit that protects seniors against poverty. Or targeting Social Security and Medicare benefits to those who need them the most. Reforms that can be found in Saving the American Dream.
The Supercommittee should quit dithering and get spending under control. Seriously.