Popular Economics Weekly
Why are the fears of a declining social safety net for social security and Medicare increasing? Barron’s Gene Epstein recently warned of dire consequences for future generations as some 78 million baby boomers begin to retire. .
“In short, the future has arrived, and it doesn’t look pretty,” said Epstein. The boomers in their 60s and the legions after them will put pressure on federal programs that support the elderly for years to come, according to projections by the nonpartisan Congressional Budget Office. The surge will fuel a process that eventually renders these programs too expensive to sustain. More ominously, the federal budget’s burden of eldercare will get heavier, not lighter, even after the boomers leave the scene completely.”
But Epstein’s cure is really a veiled push for Republican Paul Ryan’s budget plan, which is more of the same ideology—tax and spending cuts that redistribute even more wealth from taxpayers to the wealthiest. It is part of their austerity agenda, which will continue to increase the budget deficit, as is happening in Europe.
We know when the current worries over baby boomers retirement impacting social security and Medicare began. It’s told in The Price of Loyalty, Bush Treasury Secretary Paul O’Neill’s book with Ron Suskind. G W Bush and Karl Rove decided to use the four years of Bill Clinton’s budget surpluses to fund tax cuts and the two wars GW and Dick Cheney were planning, instead of protecting social security and Medicare.
The problem is that it also ‘funded’ the largest budget deficits since World War II, when we add in costs of the Wars on Terror and Great Recession. Suskind’s book documents the discussions that led to the second tax cut that mainly benefited corporations and stockholders, when President Bush had second thoughts about it. “He asks, ‘Haven’t we already given money to rich people? This second tax cut’s gonna do it again,’” said Suskind.
“He (Bush) says, ‘Didn’t we already, why are we doing it again?’ Now, his advisers, they say, ‘Well Mr. President, the upper class, they’re the entrepreneurs. That’s the standard response.’ And the president kind of goes, ‘OK.’ That’s their response. And then, he comes back to it again. ‘Well, shouldn’t we be giving money to the middle, won’t people be able to say, ‘You did it once, and then you did it twice, and what was it good for?’”
It’s all there in The Price of Loyalty, and was the reason O’Neill was relieved as Secretary of the Treasury in 2002. He objected to returning the hard-won surpluses to GW’s richest supporters, whether individuals or Cheney’s Military-Industrial buddies such as Halliburton or Kellogg, Root and Brown that would most benefit from the Iraq invasion (i.e., oil and military supplies).
And Republicans are planning more of the same if the so-called Ryan budget plan, recently passed by the House of Representatives, becomes law according to the Center for Budget Policies and Priorities.
“The CBO report, prepared at Chairman Ryan’s request, shows that Ryan’s budget path would shrink federal expenditures for everything other than Social Security, Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and interest payments to just 3¾ percent of the gross domestic product (GDP) by 2050. Since, as CBO notes, “spending for defense alone has not been lower than 3 percent of GDP in any year [since World War II]” and Ryan seeks a high level of defense spending — he increases defense funding by $228 billion over the next ten years above the pre-sequestration baseline — the rest of government would largely have to disappear.”
The Clinton surpluses, the result of a record 10 years of uninterrupted economic growth that was the longest growth cycle in U.S. history, had been projected to ultimately pay off all government debt accumulated since World War II. President Clinton predicted the increase in the expected surplus—some $1.9 trillion—meant the government could be debt-free by 2010. But that depended on a whole lot of assumptions, such as continuing his cutbacks in military and other government spending. But the dot-com recession followed, causing some $4 trillion in stock losses alone.
In fact, all of the Bush tax cuts cost taxpayers $1.85 trillion while government spending was boosted 23 percent in his first four years, according to Brookings economist William Gale, who worked on the Council of Economic Advisers under President George H.W. Bush. And just 3 million net jobs were created during the Bush years.
But there is an alternative that will help to save our safety net. It is to return to Clinton-era policies that created so much wealth in the 1990s—raising tax brackets to their prior levels, cutting back on military and other government spending, and putting back the pay-as-you-go rules of that era that didn’t allow Congress to spend more than it taxed. So it turns out Republicans have been the biggest spenders.
Harlan Green © 2012