August 20, 2008
By Brian M. Riedl
On July 13, the Journal Sentinel opened its pages to
Wisconsin's congressional delegation. Each member weighed in on how
he or she would solve the long-term Social Security and Medicare
As the only Wisconsinite (born and raised in Appleton) sharing
the podium with David Walker on the Fiscal Wake-up Tour, I've taken
the liberty of grading each lawmaker's response. But first, let's
review the nature and size of the entitlement problem.
Much of what drives the problem is simple demographics. In 1960,
five workers paid the taxes for each retiree's Social Security and
Medicare benefits. Today that ratio is just 3-to-1. The retirement
of 77 million baby boomers will drive that ratio down to 2-to-1 by
2030. That means every two children born this year will have to
support themselves, their families and the Social Security and
Medicare benefits of their very own retiree. The cost will be
But demographics are only part of the story. Rising health care
costs put Medicare in even worse shape than Social Security.
Overall, Social Security and Medicare face a combined 75-year
deficit of $43 trillion. That's trillion with a "t."
Unless these entitlements are reformed, paying all promised
benefits would require: 1) doubling all tax rates; 2) eliminating
every other federal program, including defense and education; or 3)
running massive budget deficits that eventually would collapse the
economy. And every year of delay raises the final cost of reform by
trillions of dollars.
Yet delay is all we are getting from Congress. Thankfully, the
Journal Sentinel asked Wisconsin's elected officials to confront
this issue and offer their solutions. While some lawmakers passed
the test, others failed to offer much beyond rhetoric.
Rep. Paul Ryan (R-Janesville) gave the most detailed
response. In fact, Ryan is the only member of Congress to introduce
comprehensive legislation to solve the entire long-term shortfall.
It is not a painless proposal - it would redesign federal health,
retirement and tax policy - but it protects benefits for those who
need them without taxing the next generation into bankruptcy. Agree
or disagree with the plan itself, Ryan deserves credit for being
the only lawmaker offering one. Grade: A
Rep. Tammy Baldwin (D-Madison) and Rep. Ron Kind (D-La
Crosse) both endorsed legislation creating a bipartisan
entitlements commission that would propose a long-term fix and then
require that Congress vote on that proposal. While neither lawmaker
indicated which reforms he or she would like to see in such a
package, the commission is a good start. Grades: B
Sen. Russ Feingold (D-Middleton), Rep. Jim Sensenbrenner
(R-Menominee Falls), and Rep. Tom Petri (R-Fond du Lac)
all strongly articulated the need for reform. Feingold focused on
the need to slow rising Medicare costs, Sensenbrenner called on
Congress to put politics aside and address the issue and Petri
summarized the problem and several known proposals. However, none
of the lawmakers endorsed specific proposals that would
sufficiently close the fiscal gap. Grades: B-
Sen. Herb Kohl (D-Milwaukee) displayed a poor
understanding of the issue. After understating the size of the
Medicare funding shortfall by $25 trillion, he incorrectly asserted
that the Social Security Trust Fund will solve the program's
funding problem (Congress already spent the trust fund, leaving
only IOUs that must be repaid in new taxes). Kohl failed to endorse
any Social Security solution, and his Medicare proposal of
promoting generic drugs would not close more than a small fraction
of the long-term gap. Grade: D+
Rep. Gwen Moore (D-Milwaukee) criticized the 2001 and
2003 tax cuts (though repeal would close only 10% of the long-term
fiscal gap) and Iraq spending (which is just 3% as large as the
entitlement unfunded liability). Only then did she address
entitlements by vaguely calling for health care reform - without
naming a single specific idea. Grade: D
Rep. David Obey (D-Wausau) expressed more concern over
the $1 trillion spent in Iraq than Social Security and Medicare's
$43 trillion liability. Obey downplayed the entitlement funding
challenge, called reform advocates "chicken littles" and then
proposed universal health care - which would deepen the fiscal hole
- before punting all responsibility to solve the entitlement
problem to the next president. Not exactly a profile in courage.
Rep. Steve Kagen (D-Appleton) gave the most bizarre
response of all. Asked how to solve Social Security and Medicare's
deficits, he ignored the question and instead recited unrelated
talking points on energy independence, oil drilling and health care
accessibility. Kagen's response failed to display even an
elementary understanding of Social Security and Medicare reform.
Reforming Social Security and Medicare will not be easy or
painless, but delay only worsens the problem. It is time for
lawmakers to drop the platitudes and tackle reform. The American
people are ready for this debate.
Riedl is Grover M. Hermann Fellow in Federal Budgetary
Affairs in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation.
First appeared in The Milwaukee Journal-Sentinel
On July 13, the Journal Sentinel opened its pages to Wisconsin’s congressional delegation. Each member weighed in on how he or she would solve the long-term Social Security and Medicare funding shortfall.
Brian M. Riedl
Grover Hermann Fellow in Federal Budgetary Affairs
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