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    Tough Choices

    April 22, 2011


    As I write this my mother-in-law Gwen is outside digging up recalcitrant dandelions from the lawn of the house we will be sharing in the years ahead. She is 82 years old, and flourishes in part because of two replacement knees, two replacement hips and a replacement shoulder (it looks like she will have to do the other one soon). Certainly the dandelions are no match for her.

    In many ways she is perfectly symbolic of many of the fiscal debates now washing across the country. Her public employees union in California bargained for generous retirement benefits in years when there were no pay raises. These are now a burden on an over-burdened state. She also, of course, gets Medicare and Social Security, and Medicare in particular represents a grave threat to US fiscal stability.

    Gwen, coming from a hard working and self-reliant background, worked all her life, putting herself through college and graduate school at a time and place when many young women only finished high school. And she contributed all her life–to her state benefits as part of her modest salary, to Social Security, and to FICA. There are tens of millions retirees like her, their ranks swelled every day by the baby boomers.

    The heart of the fiscal bind we face is that the contributions they made over all those years do not cover the costs of the benefits they now receive. The difference is being made up by younger citizens, who may often be raising families. The Federal government transfers money from the young to the old.

    This dilemma is much more than a fiscal problem, its a fundamental moral choice–should we choose as a society to spend less on pre-natal care and early childhood education, or less on the healthcare providers who tend to the needs of millions of Medicare recipients?

    Had past contributions been adequate, of course, we wouldn’t be in this situation, but you would be surprised at the level of contribution necessary to fully-fund the benefits we enjoy. In Singapore, praised by some as a very low tax state, there is a mandatory contribution to health and retirement programs, in addition to regular taxation, of about 30% of an individual’s income. That is the way to ensure no inter-generational transfers of income. Are we ready for that in the U.S?

    There are no easy answers. We should begin the painful migration towards a fully funded future, but that will take many years. In the meantime sacrifices must be made. What is wretched is that none of our leaders, even as they sidle up to our fiscal difficulties, are honest about the choices to be made between the young and the old. Older citizens vote at high rates, as a result neither party want impose any significant burden on them. There were cuts in the administrations healthcare bill, but the fiscal conservatives in the Republican party, eager for political advantage, successfully mobilized voters against even that modest beginning. Both Rep. Ryan and the White House have now proposed changes to entitlements, but anyone over the age of 55 will be largely unaffected.

    Avoiding a tough moral choice is moral cowardice, and that is where the political leadership in Washington is presently stuck. But I am convinced that they underestimate the ability of citizens to accept shared sacrifice. In fact not to be candid about the challenge we all face reveals a kind of contempt for voters. And while it may be that it is easy to prey on the fears of the old, if they are anything like my mother-in-law they are tougher than the leadership on Capitol Hill, and ready to do the fiscal weeding necessary to put our house in order.

    Health, Politics

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    1 Response to Tough Choices

    1. Bill Kruse

      What I find most disconcerting is the speed and willingness with which S&P has downgraded the States compared to to how it looked the other way for years leading up to and during the credit crunch. It appears they were on one agenda then and a different one now – but what? Is this evidence of the ‘banker wars’ rumours that are doing the rounds?

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