WASHINGTON -- On the federal debt crisis, inertia has all the momentum. A compelling political logic favors inaction.
Americas debt problem is mainly an entitlement spending problem. Serious entitlement reform would involve concentrating limited resources on the poor, eliminating subsidies for the rich and moving support for the middle class from a system of defined benefits to defined contributions. However skillfully this transition is designed, it will mean a middle-class benefit cut. That's why, in 2005, Republicans and Democrats both fled from Social Security reform like startled grouse. Even worse, this year President Obama and the Democratic Congress created a new health entitlement funded mainly by taking money from Medicare, making that program more difficult to stabilize in the future. The Obama administration has not only avoided reform; it has complicated the job for future administrations.
The need for entitlement reform is almost universally conceded. The politics of entitlement reform, however, seem hopeless. The only consistent advocates of responsibility are congressional deficit hawks -- generally a finger-wagging, dyspeptic bunch. Being right does not make them attractive, and there will never be enough of them to carry a political task this heavy. If the debt debate is defined in Congress as pitiless austerity against business as usual, business as usual will regularly prevail.
But the vast scale of the debt problem creates an unexpected political possibility. According to the Congressional Budget Office, spending on mandatory health programs and Social Security is expected to grow from about 10 percent of gross domestic product today to roughly 16 percent in 2035. By way of historical comparison, government spending on all of its programs and activities has averaged about 18.5 percent of GDP over the last four decades. Put another way: In 25 years, nearly the whole portion of the economy we spend on government will be spent on entitlement programs alone. Just about every other function and priority of the federal government will be swallowed up by increased spending on health care and retirement, or the percentage of the economy taken by taxes will need to dangerously increase. This is the other option.