America's fiscal house is in trouble. According to the 2006 report of the trustees of the Social Security and Medicare trust funds, the two entitlement programs owe $37 trillion more in benefits than they will be able to pay. If you've ever held budgetary responsibilities for an organization ranging from a Fortune 500 company to a family of four, you know that some debt is ok but debt that is piled so high it will bankrupt you is foolishness. The US government faces piles upon piles of debt that is unsustainable over the next twenty-five years.
The job of any social unit, whether it be the family, the city, state, or federal government, is to anticipate a potential disaster. The problem is clear and now the courage to act together is what is needed to avert the upcoming crisis we will impose upon any person below 30.
I believe in the system and believe the system can self-correct, so this column is an appeal to our leaders on both sides of the house to work together for change. The problem after all is only escalating in staggering proportions.
In 2005, economists estimated that Social Security trust funds would be depleted by 2042. Just one year later, in 2006, economists revised their earlier estimates and declared that the funds would be depleted by 2040. Meanwhile, Medicare—hindered in part by an enormous prescription drug benefit approved in 2003—also speeds toward insolvency.
How did we get here? Well, the facts on the ground are startling.
In the 1950s, there were approximately 16 workers to support one recipient of Social Security benefits. Today that number has dwindled to a little over 3 workers per benefit-recipient—and by the time the youngest members of today's workforce retire there will be only two workers per benefit-recipient.
Despite such a gloomy future, politicians in Washington have long refused to offer credible solutions for our looming fiscal crisis. President Bush is a notable exception to this rule, as he used his post re-election momentum to push, albeit unsuccessfully, for Social Security reform in 2005. Unfortunately, Democrats—and most Republicans for that matter—refused to support the president's plan, largely for political reasons.
We could ill afford such political posturing then and we certainly can not afford it now. Instead, we need Congress and the White House to devise innovate, bipartisan solutions to fix our entitlement programs. Surprisingly, the framework for such bipartisanship is already in place. In fact, it has been for nearly seven years.
In August 2000, the Democratic Leadership Council met at Franklin D. Roosevelt's estate in Hyde Park, New York to plot out its strategy for the future. The result was a document called the "The Hyde Park Declaration" that, among other things, claimed that Social Security and Medicare are "growing at rates that will eventually bankrupt them and that could leave little to pay for everything else that government does. Moreover, the declaration stated that "we can't just spend our way out of the problem" but rather we need "structural reforms that restrain their growth and limit their claim on the working families whose taxes support the programs."
And what would those "structural reforms" look like? Among other things, the DLC called for "Retirement Savings Accounts to enable low-income Americans to save for their own retirement."
If that sounds familiar, it should—it's exactly what President Bush proposed—and Democrats opposed—in early 2005.
Writing in the Christian Science Monitor in 2005, former Minnesota Congressman Tim Penny lamented such a development. He said that despite similarities between the DLC's document and President Bush's plan, Democratic legislators "not only attacked every serious proposal to fix Social Security, [they even] attempted to deny the seriousness of the problem itself." Continuing, Penny said that elected officials need to "put politics aside and join together in forging a bipartisan solution to Social Security's problems."
President Bush echoed a similar theme in a radio address earlier this month by calling for Republicans and Democrats to "come together to confront the challenge of entitlement spending. Should they not, the president continued, "we will saddle our children and grandchildren with tens of trillions of dollars of unfunded obligations. We will leave them with only three bad options: huge tax increases, huge budget deficits, or huge immediate cuts in benefits."
Over the past few months, President Bush has repeatedly said that all options are on the table for Social Security and other entitlement reform. On this issue he has displayed an ability to think strategically about the future, a capacity for innovation, and, perhaps most importantly, a willingness to negotiate. Meanwhile, since rolling to victory in November, Democrats have spent a lot of time talking about their plans to enact bipartisanship legislation. What better place to start than entitlement reform?