If you want to understand the nature of the nation’s fiscal nightmare, consider a talk-radio host’s recent temper tantrum.
Neocon blowhard Howie Carr’s program airs throughout New England and streams online. Earlier this month, he got into a testy colloquy with New Jersey’s governor about Social Security. The broadcaster and tabloid columnist was peeved that Chris Christie, a possible candidate for the GOP’s 2016 presidential nomination, had proposed “a modest means test” for the increasingly insolvent program. Under the governor’s plan, anyone earning $80,000 a year in post-retirement income would see his monthly check trimmed. Beneficiaries making more than $200,000 would be cut off entirely.
Christie’s trial balloon “perturbed” Carr, who would surely be hit by means-testing, “more than modestly.” The 63-year-old host thundered that the Garden State’s chief executive had “decided he’s running for ‘tax collector for the welfare state,’ as Newt Gingrich once said of Bob Dole.”
Right — attempting to control an unsustainable entitlement expenditure is the same as raising taxes. Anyway, Carr went on to squeal that “my Social Security is going to be cut to pay not only for deadbeat Americans, but now for God only knows how many loafers from the Third World.” Falling for the shibboleth that FDR’s most popular welfare program is a form of “social insurance,” he ranted: “What about the promise that was made to the American people? That they were paying into a system that guaranteed them an income in retirement. Nothing about means testing.”
Unlike Carr, policy analysts aren’t in the business of hurling fact-free demagoguery to drive listenership and motivate callers. Research-based analysts don’t care about politicians’ worthless pledges and voters’ appalling ignorance. The math is what it is.
Lawrence J. Kotlikoff, a Boston University professor, isn’t likely to appear on “The Howie Carr Show” anytime soon. He estimates that baby boomers — more than 70 million of them — are likely to collect “about $40,000 in Social Security, Medicare, and Medicaid benefits per person per year.”
The Congressional Budget Office’s latest assessment is that Social Security gobbles up 4.9 percent of GDP today — up from 2.4 percent in 1965. By 2025, its share will rise to 5.7 percent. But “major health care programs” — primarily Medicare and Medicaid — are costlier. From a base of zero in 1965, their portion of GDP stands at 5.1 percent today, and will grow to 6.1 percent in 2025. “Mandatory” spending now claims nearly two-thirds of the federal budget. Trillion-dollar annual budget deficits, the scourge of the early years of the Obama administration, are slated to return in less than a decade.
Over the long term, the outlook is far scarier. In February, Kotlikoff issued a “declaration of national insolvency” to the Senate Budget Committee. The true “fiscal gap,” the economist estimates, is $210 trillion. At “58 percent of the present value of projected future taxes,” the economist explained, Washington is “in far worse fiscal shape than was Detroit before it went broke.”
Christie-style reforms are inevitable, because while it’s news to Elizabeth Warren, taxing “corporations” and “the top 1 percent” won’t fix entitlements’ unfunded liabilities. Named after a San Francisco financier, “Hauser’s law” is the acknowledgment that fedpols can tax only so much. According to its lawgiver, financier W. Kurt Hauser, in the postwar era, “there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19 percent of GDP.”
So cuts, in time, are certain. But you won’t hear much about the future rollback of entitlements from the conservative entertainment complex. It gleefully rails against Big Government and the national debt, but is downright cowardly when it comes to exposing the programs that are wrecking the country’s fiscal health and jeopardizing America’s economic competitiveness.
Why? Conservatives in America are old. (In a 2014 profile, Frank Rich quipped that with “a median viewer age now at 68,” the Fox News Channel “is in essence a retirement community.”) And if we’ve learned anything about the elderly in the last few decades, it’s that they love Social Security (monthly check), Medicare (subsidized medical coverage), and Medicaid (nursing-home subsidies.) Telling greedy geezers that, in Christie’s phrase, “something’s gotta change,” isn’t good for business — and the right’s media personalities know their customers.
Former Nevadan D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. He lives in Corrales, N.M.