The Social Security and Medicare trustees have just issued their annual report on the state of these programs, and the picture is not pretty.
The combined unfunded liability, the shortfall of projected funds available to meet projected obligations, of the two programs is around $75 trillion. For perspective, the Gross National Product is $10 trillion.
We need to recognize that these two massive government programs can only continue in their current form if taxpayers agree to increases in taxes and/or cuts in benefits.
The welfare-state chickens that we hatched in 20th-century America are coming home to roost in the 21st century. If we don’t start getting realistic about what we’re dealing with, our children and grandchildren will not be living in a country of dreams, but a nation trying to survive.
Recently, Congress passed bankruptcy-reform legislation that will place more direct personal responsibility on every citizen waving around a credit card. We need to get equally tough with our national credit card – the power of Congress to tax and spend.
Bankruptcy recognizes that to fix the problems you have created, you’ve got to start doing things differently.
One good first step for doing things differently is to acknowledge that Social Security and Medicare are welfare programs. They transfer tax dollars from one set of citizens to another with the objective of achieving some social end. Once we realize that these programs are welfare programs, we’ll understand that they have the same inherent flaws that characterize all programs that we explicitly call welfare.
It’s a fact that people change their behavior when government takes over aspects of their lives for which they had once been responsible. Most people wouldn’t go to work if they felt the government was going to pay their bills.
When Congress passed sweeping welfare reform in 1996, politicians finally recognized that government was making huge expenditures to welfare recipients that encouraged them to perpetuate the very problems that they needed to solve. Welfare had stepped well over the line from being a social safety net to becoming a social engineering program. Lives were destroyed rather than helped.
Our welfare system needs more improvement, but the 1996 reforms have been successful. By scaling back government and helping individuals get realistic about the challenges in their lives, millions have gotten off the dole and gone to work. Confused and disenfranchised former welfare recipients are now building real and productive lives for themselves.
Similarly, through Social Security and Medicare, Americans have turned large aspects of their lives over to government control. If the massive tax transfers that fund these programs remained in the hands of private citizens, the power of individual choice and the creativity of the marketplace would deliver the same quality products that free markets and personal control deliver to all other aspects of our lives.
In the case of Medicare, which, according to the trustees’ report, is in worse shape than Social Security, one-size-fits-all government central planning has hurt every participant in the health-care marketplace – consumers, doctors and hospitals. Just as in the case of inner-city welfare recipients, the government takeover of private lives in health care has displaced reality with political illusions. And illusions are not a good starting point for prudent personal decision-making and planning.
Social Security and Medicare are afloat in red ink because these programs are the products of government central planning. More of the same will not solve the problems. As Bill Clinton once said, we need to “end welfare as we know it.”
This is one place where we all can actually learn something from rap culture. The theme of rappers is “keeping it real.” The brutal honesty of rap is what shocks and offends so many of us. We may not like what the rappers are saying, but they can’t be accused of masking who they are or what they are about. Honesty helps make clear what is wrong with our country, and this provokes action and change.
In this sense, we need a little more rap culture in Washington. Americans don’t need word games. They need truth so they can get on with the business of solving their problems.
When I worked to help get welfare reform passed, it wasn’t a hard sell to talk about getting inner-city welfare recipients off the dole. We have a tougher political challenge with Social Security and Medicare, because now we’re talking about getting Main Street America off the dole.
If we want to fix the problems, we’re going to have to start getting real.