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AARP: Don’t Pinch-Hit Cutting Waste for Entitlement Reform

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Unread 09.23.11, 11:04 AM
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AARP: Don’t Pinch-Hit Cutting Waste for Entitlement Reform

On 09.23.11 06:12 AM posted by Emily Goff

In its latest video railing against reform of Medicare and Social Security, AARP pushes for a pinch hitter to solve Washington’s spending problem—and a poor one at that.

The organization charges Congress to cut wasteful spending and close tax loopholes instead of reducing Medicare and Social Security benefits. Once again, they get it wrong on how to balance the budget and put the nation on a fiscally sustainable path.

Congress can work to eliminate waste, fraud, and abuse to demonstrate it is serious about controlling spending and using taxpayer dollars wisely. Everyone agrees on that, and there’s nothing stopping them from doing it.

Even so, these steps alone won’t balance the budget. While it may seem lavish for the Department of Justice to spend $16 for a muffin and over $8 for a cup of coffee, government waste is not the driver of growing federal deficits and doesn’t represent a significant portion of the entire federal budget. It is misguided to think that targeting waste at the expense of curbing other federal spending—particularly Medicare, Medicaid, and Social Security program spending—is the best policy.

In its ad, AARP asserts that seniors have worked hard and paid into the system. This is true, but the problem is that both Medicare and Social Security are set up so that current workers pay for current seniors. So those entering retirement now did not fund their own benefits—they funded those of generations of seniors before them. Maintaining this level of benefits for the baby boom generation is not possible, as the ratio of workers funding retirees will drop significantly, causing costs to grow dramatically.

In addition, seniors receive benefits well in excess of what they paid into the system. In the case of Medicare, payroll taxes paid toward the program throughout a worker’s life are paid into the Medicare Hospitalization Insurance Trust Fund, which funds only the Part A (or coverage of inpatient services) portion of Medicare. In addition to Part A, Medicare also covers outpatient services and prescription drug coverage, both of which are voluntary programs that seniors did not pay into and are instead funded from general revenues.

Even cutting vital defense spending, a core constitutional function of government, would not solve our spending problem, because it wouldn’t tackle the coming behemoth of rising entitlement program costs.

Congress should get serious about fiscal reform, so it should propose and debate solutions that truly reform these entitlement programs. That’s the main way to achieve success in curbing future spending and reduce rising future deficits. It’s also the only way Congress will ever balance the budget.

In baseball, the player replaced by a pinch hitter isn’t allowed to re-enter the game. If Congress only goes after the low-hanging fruit and ignores the real drivers of future spending, they run the risk of relegating entitlement reform to the dugout and leaving it there for good. If that happens, the losing team is the American people.

AARP should be honest with their members about that fact, and the same goes for the President and Congress.

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