Another Looming Entitlement Crisis

Posted: Aug 22, 2011 9:28 AM

I know this story was on the homepage over the weekend, but it's worth flagging for a bit of supplemental coverage:

Laid-off workers and aging baby boomers are flooding Social Security's disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency.  Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can't find new ones in an economy that has shed nearly 7 million jobs.

The stampede for benefits is adding to a growing backlog of applicants — many wait two years or more before their cases are resolved — and worsening the financial problems of a program that's been running in the red for years.  New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts. About two decades later, Social Security's much larger retirement fund is projected to run dry as well.

Much of the focus in Washington has been on fixing Social Security's retirement system. Proposals range from raising the retirement age to means-testing benefits for wealthy retirees. But the disability system is in much worse shape and its problems defy easy solutions.  The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994. That would provide only short-term relief at the expense of weakening the retirement program.

As rumors of a Paul Ryan presidential run continue to mount, this warning is a timely reminder of Ryan's animating focus: entitlement reform.  Granted, the House Budget Committee Chairman's controversial "Path to Prosperity" didn't even deal explicitly with Social Security; he chose to tackle the still broker entitlements (Medicare, Medicaid) first.  But that doesn't mean Social Security isn't in desperate need of root-and-branch reform -- as this story makes clear.  As scenes of chaos and violence continue to play out in European capitals, Americans should take careful note of what happens when bloated welfare states literally run out of money.  Forced austerity measures lead to social upheaval and, in some cases, bloodshed.  This fate is not inevitable.  The US could institute a (relatively) painless course correction tomorrow if one of our political parties wasn't cynically clinging to entitlements-related fear mongering as an election strategy.

When President Obama gives yet another "jobs" speech next month, he's expected to call for some "modest" tweaks to entitlement spending.  The chairwoman of the DNC has made similar noises, suggesting that tinkering around the edges will suffice to restore solvency to these massive programs.  It will not.  The window for getting serious about our spending and entitlements crisis remains open, but it's swinging shut.  It may be risky politics, but Republicans must make a proactive case to the American people about why real, systemic reforms aren't just preferable -- they're imperative.  Democrats will surely seek to exploit the GOP's truth-telling for political advantage next year.  Let them try.  The American people deserve a clear choice.  Republicans can take some comfort that the facts -- as highlighted in reports like the news account above -- reinforce the urgent need for bold action.   It's up to conservatives to continue to offer solutions, and then energetically make the case for why those solutions are essential.