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The Castor Oil Caucus: Ecrasez l’entitlements!

By Sarah  

"The Castor Oil Caucus: Ecrasez l’entitlements!"

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Bipartisan worthies from the Brookings Institution, the Heritage Foundation, and elsewhere have identified a great threat to the nation’s future. “Without addressing” this problem, we are told, “our newly elected leaders in 2009 will have little chance to meet the challenges that Americans face in a world of intense global competition and rapidly changing technology.”

The health care crisis? The dropout crisis? Global warming?

Wrong, wrong, wrong.

The problem is “automatic spending growth and the deficits they engender.” More specifically, the problem is “projected increases in spending for Medicare, Medicaid, and Social Security.” To address this crisis, the authors propose an automatic mechanism that forces Congress to cut the benefits in these programs, to raise taxes, or to cut spending within 5 years.

Committed to “hard choices” and “responsibility,” the authors stand ready to slash benefits for the old, the poor, and the infirm. But is this really necessary? Brookings’ own Henry Aaron, a senior fellow in economic studies, disagrees:

A CONSENSUS HAS EMERGED AMONG BUDGET ANALYSTS that potentially ruinous deficits await the nation unless current policy is changed soon and fundamentally: The baby-boom generation is about to start retiring; the nation is committed to paying the elderly and disabled pension and health benefits—Social Security, Medicare, and Medicaid—that are unaffordable; and demography and budgetary overcommitment threaten fiscal meltdown. A political recipe to avoid this specter seems to follow: The nation must cut aid to the aged, disabled, and poor; reduce all other public spending; raise taxes; or do some combination of all three.

This view omits key information. As a result, the political recipe mentioned above is misguided. The United States must reform its health care financing system, public and private. If it does so, there will be no remaining long-term fiscal problem. Reducing current budget deficits is also desirable. But the long-term problem is health care spending, private and public, not a general budget shortfall or entitlements. […]

Thus, a three-premise syllogism emerges: (1) Near-universal coverage is an essential precondition for controlling health care spending. (2) Rising health care spending is the only source of long-term budget shortfalls. (3) Controlling spending under public-sector health care programs cannot proceed independently of control of private-sector health care spending. Therefore, extending health insurance coverage to nearly everyone is a necessary precondition for dealing with long-term budget challenges.

The authors make no proposals to extend health insurance to “nearly everyone” — or anyone. Their motto might be: Pain, no gain.

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