10 Reasons Why Conservatives' Fiscal Ideas Are Dangerous

By Sara Robinson, Campaign for America's Future. Posted February 27, 2009.

The Congressional Budget Office projects that the Social Security trust fund will continue to run a surplus until 2019. (More conservative fund trustees put the date at 2017.) The fund's total assets should hold out until 2046. And that's assuming that nothing changes at all.

If it turns out we do need to make adjustments, there are two very simple ones that will more than make up the difference. One is that we could raise the cap. Right now, people only pay Social Security taxes on the first $102,000 they earn; everything over that goes into their pockets tax-free. Increasing that amount would cover even a fairly large shortfall. And in the unlikely event that fails, we can talk about raising the retirement age to 70 -- a sensible step, given how much longer we live now.

6. Ending Social Security would be well worth it, because putting those deductions back in people's pockets would provide a big enough stimulus to get us out of this mess.

Anyone who spouts this is apparently not counting on the 70 million Boomers whose wallets would snap shut permanently if you withdrew their retirement benefits just a few years before they're going to need them. As Digby put it:

Boomers are still sitting on a vast pile of wealth that's badly needed to be put to work investing in this country. But it's shrinking dramatically and it's making people very nervous. As [Dean] Baker writes, if one of the purposes of the stimulus is to restore some confidence in the future, then talk of fiddling with social security and medicare is extremely counterproductive. If they want to see the baby boomers put their remaining money in the mattress or bury in the back yard instead of prudently investing it, they'd better stop talking about "entitlement reform." This is a politically savvy generation and they know what that means.

If they perceive that social security is now on the menu, after losing vast amounts in real estate and stocks, you can bet those who still have a nestegg are going to start hoarding their savings and refusing to put it back into the economy. They'd be stupid not to.

Bad economies get that way because people no longer trust the future, and refuse to take on the risks associated with spending, lending, or investing. Social Security was created in the first place because FDR understood that a guaranteed old-age income is a major risk-reducer -- not just for elders, but also for their working adult children. And it still is. Affirming the strength of Social Security not only raises the confidence of the Boomers, as Dean and Digby have pointed out, but also of their Xer and Millennial children, who are going to have to add "looking after Mom and Dad" to their list of big-ticket financial obligations if that promise is broken.

Breaking a 70-year-old generational promise for the sake of a little temporary financial stimulus is the very definition of penny-wise and pound-foolish.

7. OK, forget I even mentioned Social Security. Besides, the real problem is Medicare.

Finally, we come down to the truth. There's no question that exponentially rising health care costs -- both Medicare and private insurance -- are unaffordable in the long term; and that getting ourselves back on track financially means getting serious about addressing that.

On close examination, even Peterson's figures eventually reveal this truth. (About 85% of his projected 2084 debt comes from expected Medicare.) Unfortunately, though, most of his materials lump Social Security and Medicare together, creating a fantasy figure that blows the real problem so far out of proportion that you can't even begin to have a rational conversation about it -- which was, of course, the whole point of ginning those numbers up in the first place.

8. Next, you're going to tell me that some kind of government-sponsored health care is the answer.

Yes, we are. The Congressional Budget Office notes that health care costs were only 7 percent of the GDP in 1970 -- and are over double that, at 14.8 percent, now.

Much of that increase came about because in 1970, most health care providers ran on a not-for-profit basis. Hospitals were run by governments, universities, or religious-based groups; in some states, private for-profit care was actually illegal. Even insurance companies, like Blue Cross, were non-profit corporations. AdminIstrators and doctors were still paid handsomely; but there were no shareholders in the picture trying to pull profits out of other people's misfortune.

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Sara Robinson is a Fellow at the Campaign for America's Future, and a consulting partner with the Cognitive Policy Works in Seattle. One of the few trained social futurists in North America, she has blogged on authoritarian and extremist movements at Orcinus since 2006, and is a founding member of Group News Blog.

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