Entitlements

You have to be at least a little amused by the way health care reform opponents are using the word “entitlement.” In their world, the word can’t be spoken without dripping sarcasm and derision. To them, the fact that an entitlement might be involved is reason enough for the health care reform effort to be stopped dead in its tracks.

This makes “entitlement” into this year’s version of “death tax,” the phrase that was used so successfully in the debate on estate taxes. Even though we don’t actually tax death, the phrase was effective because, while very few people have an estate of sufficient size to be taxed, everyone dies. As a result, support for a tax cut that would only really apply to a very small group grew to include many others.

Imagine how all those self-professed, anti-new entitlement fiscal conservatives in Washington and around the country are going to feel when they realize that, with their full support, enthusiasm, and (in some cases) votes, Cash for Clunkers is the equivalent of a new entitlement program.

Here's what I said about this in my Roll Call column today.

Readers of CGG since the election will note that in my advice to the Obama administration for what to do first, I have steered clear of Medicare and Social Security.  His immediate objectives should be to build coalitions and achieve some tangible success on whatever scale he can manage. 

Entitlement programs don't allow that to happen.  Entitlement programs are social insurance, the point of which is to redistribute resources across the population.  Reform will mean less redistribution -- less of something for someone.  A president needs not just goodwill to do that, he needs a track record of being able to implement policies in which he has held up his end of a bargain.  He doesn't have that yet.  When he gets it, he can take on the big challenges that will emerge over the next couple of decades.

Friday's Washington Post contained an article with a very provocative headline, "Obama Pledges Entitlement Reform."  Here are the first two paragraphs:

It may be good politics, but the plan John McCain released last week doesn't work from a budget perspective unless:

• He's also proposing a steady series of record-high nominal deficits

• He's somehow figured out how to make spending cuts acceptable when up to now Congress, whether it has been under Republican or Democratic control, has refused to reduce to the levels he's suggesting

• He's figured out a way to prevent natural disasters from occurring

• He can guarantee that no military or foreign policy issues will occur while he's president

The most glaring problem with the McCain plan is also the simplest to see: he is proposing more than $3 trillion in tax reductions (some estimates put it at $5 trillion or higher) with nothing close to offsetting spending cuts.

(In their separate posts here at Capital Gains and Games, Pete discusses the McCain tax plan and Andrew deals with the economics, so I'll leave it to them to explain in more detail what is being proposed in those areas.)

Andrew rose to the occasion and came up with a perfectly acceptable definition for the phrase "sustainable solvency" used by the think tanks in their entitlement reform plan.

But...and it's a big but...this is really nothing more than attempt to come up with a process for cutting entitlement spending.

I completely understand the need to make these and all other programs in the federal budget fit within the revenues that will be collected, to make the revenues match the spending, or some combination of the two.

But coming up with a theoretical 75 -year "budget" for these programs and then relying on a trigger mechanism to do the dirty work is really nothing more than an admission that elected officials won't do what's necessary if left on their own.  In other words, this is like a base closure commission and process for entitlemnent programs?