As the budget deficit grows worse and as healthcare reform looks likely to bend the cost curve in the wrong direction, hopes are again focused on an all-encompassing commission to reduce Social Security and Medicare deficits as well as potentially reform the tax code. The most prominent commission proposal comes from Sens. Kent Conrad (D-ND) and Judd Gregg (R-NH)—the chairman and ranking member of the Senate budget committee—and is roughly matched on the House side by a plan from Reps. Jim Cooper (D-TN) and Frank Wolf (R-VA). Additional commission proposals have come from Sens. George Voinovich (R-OH) and Dianne Feinstein (D-CA). These ideas gained momentum this week through a letter sent by 12 Senate Democrats and Independent Joe Lieberman to Majority Leader Harry Reid (D-NV) endorsing an entitlement commission. Sen. Evan Bayh (D-IN) has signaled that he will not support an increase in the debt ceiling unless such a commission is established.
A coalition of liberal groups, however, has come out against a commission, saying, “any deficit reduction measures should be carried out in a responsible manner, providing a fairer tax system and strengthening—rather than slashing—Social Security, Medicare and other programs that are vital to the middle class.” While not the most responsible position, from my point of view, it has a certain tactical advantage: the longer we wait to fix Social Security and Medicare, the greater the share of the population will be receiving benefits and thus tend to favor solutions based on increased taxes. While these groups couch their arguments in terms of transparency and use of the regular order in Congress, the political dynamic of the delay is to lock in as much growth in entitlement spending as possible.
All of this is important, but I think there’s a broader—and more depressing—point to be made: as time passes, the federal government’s responsibilities increasingly focus on entitlement spending—the government becomes, in a quip, a “pension plan with an army.” (Army optional in later years.) Yet, as these calls for an entitlement commission make clear, our form of government is, by the admission of leading members of both parties, unable to manage the programs that are now the core functions of government. As I put it in a recent speech at the American Enterprise Institute, “the government can’t do what the government does.”
I’m not a political scientist, or at least not a very good one, so it’s hard to say with certainty what aspects of our governmental setup make it so hard to take on these problems. Divided power is one issue, such that a small number of objectors can effectively prevent action from being taken; this cements in place the status quo. Likewise, our more frequent federal elections—voters go to the polls every two years in the United States while in the United Kingdom for instance, five years may pass between elections—may make policy makers more risk averse, always focusing on the next election rather than what happens to programs in coming decades.
It strikes me that other Anglo countries have been better able to get on top of aging and healthcare issues, with reforms particularly to retirement programs that make these countries’ budgets more sustainable over the long term than America’s. This isn’t to say their policy solutions are better than those we might construct here at home—though, on the retirement front, the United Kingdom and Australia have more individual and market-based retirement programs than anything Social Security reformers here in the United States could hope for. But they have managed to find solutions that are reasonably sustainable and reasonably consistent with their own national values and priorities.
The irony here is that while the United States is considered the most conservative of the Anglo countries, with the smallest share of government spending relative to GDP, our inability to address rising entitlement spending may mean we won’t stay that way forever. By the year 2019, the Congressional Budget Office forecasts, the combination of entitlement spending, defense spending, and interest on the national debt will be enough to consume every penny of tax revenue collected. With our ability to borrow likely to be constrained in the future, we face a choice of holding the line on spending or seeing government grow far beyond our historical preferences. Maybe an entitlement commission can help Americans and their representatives in Washington make our historical preferences for limited government consistent with our commitments to provide income and healthcare to the elderly. But the fact that to do so it takes a non-election commission, empowered to override many of the standard legislative processes in Congress, should be a sobering thought on how distant the practice of government has come from our idealized view of it.
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