Making entitlements SAFE-er

Posted: Mar 06, 2007 12:05 AM

In any policy battle, it helps to have allies. So it’s good that AARP seems finally ready to help press for reform of entitlements such as Social Security, Medicare and Medicaid.

AARP’s shift can be seen in its latest TV ad, “Future Champions.” It shows children stressing the need to “find real long-term solutions to some of America’s most pressing issues -- health care and long-term financial security.”

The ad is misleading in some ways. Speaking about entitlements, one boy asks, “Will we keep those promises?” when, of course, this child has made no promises. In fact, the big three entitlement programs are promises made by older generations -- to give themselves benefits that younger workers will have to pay for through ever-rising payroll taxes.

But the overall message of the ad is that we need to make some big changes to fix entitlements. That’s a refreshing change from two years ago. Back then, when President Bush was urging the creation of individual retirement accounts within Social Security, AARP’s ads insisted, “If you had a problem with the kitchen sink, you wouldn’t tear down the entire house,” hinting that entitlement problems weren’t all that bad.

But the organization now seems to understand that the country’s on the verge of a fiscal catastrophe.

The Congressional Budget Office predicts that spending on Social Security, Medicare and Medicaid will soar from just over 8 percent of GDP today to almost 19 percent in 2050, when the cute children in today’s TV ads will be middle-aged parents. Their bill will be gigantic: $38 trillion to pay for the Social Security and Medicare benefits their parents have promised themselves -- but not arranged to pay for. Add in the national debt and other entitlements, and it works out to $440,000 for every household in the U.S. today -- enough to buy each of those families a new home. Or two.

So how can we fix things? Well, as we learned in the debate over Social Security, we can’t simply take on one problem at a time. If we attempt to reform just one of the big programs, some group will always fight for the status quo. We need to fix all three at once.

Also, we need to give lawmakers some cover. To accomplish that, Congress should form a commission such as the one Rep. Frank Wolf, R-Va., proposed last year. Wolf would label it “SAFE,” for “Securing America’s Future Economy.” It would have 16 voting members, including at least four members of Congress, the director of the Office of Management and Budget and the secretary of the Treasury.

The commission would be bipartisan and have one year to develop plans to:

Fix the imbalance between long-term federal spending promises and projected revenues.

Boost national savings to spur domestic investment and economic growth.

Simplify the budget process to place greater emphasis on long term fiscal issues.

The first thing the commission would do is leave Washington and discuss reform options with Americans. That should help it avoid the temptation to hatch some scheme behind closed committee-room doors. Plus, the members would surely find, as The Heritage Foundation has with our ongoing Fiscal Wake-Up Tour, a real desire out there to fix entitlement programs.

Once it reports to Congress, lawmakers would be required to hold a simple up-or-down vote on each of its recommendations. This should help break the legislative logjam. Just as base-closing commissions enabled lawmakers to shutter obsolete military bases (even those in their own districts or states), a SAFE Commission would help lawmakers make necessary changes without being accused of “destroying” entitlement programs.

Many of us over 50 realize that our generation, however inadvertently, created the coming entitlement crisis, and we understand it’s up to us to solve it. AARP will be a welcome ally -- if we can believe their ads. Establishing a SAFE Commission should help us find out.