Sensible Centrist Crisis Manufacturing

by dday

This is a dumb article.

Presidential hopefuls are mum on Medicare and Social Security woes

With the presidential campaign going full tilt, a new government report on a big national problem is usually followed by volleys of rhetoric from the candidates. But on Tuesday, when the annual report on the precarious state of Medicare and Social Security came out, the reaction was not exactly deafening.

The two programs on which millions of elderly Americans depend are apparently just too hot to handle — especially since any realistic solution is likely to involve a politically unpalatable mix of higher taxes and lower benefits.

Apparently, the candidates aren’t worshipping at the High Broderist altar of entitlement reform quite enough for the refined tastes of media elites. It’s an easy issue to demagogue (“They’re going to run out of money!”) but nobody wants to tell the truth about it.

The trustee’s report on Medicare and Social Security showed the programs “running out of money” at the same time in the future as the year before. In other words there’s no financial deterioration in these programs, and they have massive trust funds to cover the distant possibility that expenditures will outpace receipts.

Medicare is a problem, but it’s a symptom of the much larger problem of soaring costs in health care. And both Democratic candidates have extremely detailed programs to deal with that in a comprehensive way. So “being mum about Medicare” apparently means “having a plan to fix health care including Medicare.”

Social Security is most assuredly NOT a problem. As Paul Krugman notes, statistically speaking the program is in better shape in 2008 than it is in 1993. This doesn’t compute because we’ve been fed this line, and are continuing to be fed this line, that the baby boomers are all retiring and the entitlement system is a minute away from collapse. This has become hardened conventional wisdom that “everybody knows,” and so when the Secretary of the Treasury comes out and claims that government benefit programs are in trouble, everyone nods sagely. Happens to be untrue, and you’ll never guess the reason why: undocumented immigrants.

(L)ast year the trustees estimated that Social Security had an overall 75-year deficit of 1.95% of taxable payroll. This year it’s 1.70%. That’s a pretty substantial improvement. What caused it? […]

In previous reports, the other-immigrant population was projected using assumed annual numbers of net other immigrants with a static age-sex distribution. For this year’s report, the annual numbers of net other immigrants are projected by explicitly modeling other immigrants and other emigrants separately.

Translation: instead of just pulling a net number out of a hat, the trustees built a model that estimated the actual demographic characteristics of both immigrants and emigrants. And guess what?

• Illegal immigrants tend to skew young. This benefits the system.

• Young people have more children than older people. This benefits the system.

• Some illegal immigrants pay taxes for a few years and then leave. This benefits the system.

Bottom line: “This year’s report results in […] a substantial increase in the number of working-age individuals contributing payroll taxes, but a relatively smaller increase in the number of retirement-age individuals receiving benefits in the latter half of the long-range period.” Give or take a bit, it turns out that this shores up the Social Security system to the tune of around $13 billion per year. Thanks, illegal immigrants!

This is one of those issues where the “sensible realist” proposal is actually radically skewed to suit the needs of the “drown-the-government-in-the-bathtub” crowd. Entitlements are mostly fine. Health care itself is in crisis and needs major cost control reform, but Medicare and Social Security are successful government programs. That’s why they must be demonized as “on the verge of collapse” by conservatives who must never allow the perspective that government can work to enter the mainstream, and a lazy media elite goes ahead and believes them.

I’m assuming that most people reading this kind of already know all this, but it’s good fodder for your conversations with those who don’t.

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