Candidates’ focus missing the mark

Editorial
Published: April 3, 2008

Hillary Clinton did not have to dodge sniper fire in Bosnia. Barack Obama thinks his grandmother is a “typical white person,” whatever that is. John McCain can’t keep the factions in the Mideast straight. These are interesting gotcha moments, but they are not nearly so important as what each of the candidates proposes to do about the nation’s entitlement crisis.

The latest annual report from the trustees of Social Security and Medicare brings yet another warning of impending doom: The programs face “enormous challenges” that require serious attention and significant policy changes. Otherwise, Medicare will run out of money in about a decade, and Social Security will go bust by 2041.

To put the crisis in terms of a 30-second campaign spot, it’s 3 a.m. and the red phone is ringing. What do the candidates propose to do about that?
Hillary Clinton’s approach consists largely of covering her ears and chanting, “la-la-la-I-can’t-hear-you.” In Iowa she blasted those who “run around all the time sounding the alarm.” She proposes mandating that everyone buy health insurance, perhaps on pain of garnisheed wages, and “fix[ing] the holes in the safety net to ensure that the most vulnerable populations receive affordable, quality care.” Nowhere does she acknowledge that the combination of rising health care costs and the aging of 78 million baby boomers will require making hard choices and rationing care one of two ways: higher prices or bureaucratic edicts. On Social Security she proposes creating a bipartisan commission to study the question, because “raising the retirement age is not an answer. Cutting benefits is not an answer.” Oh, and raising the payroll tax isn’t the answer, either. What is the answer? She doesn’t say.

Barack Obama takes a more kid-glove approach to universal health care, but he still wants to expand coverage largely through government action — which does nothing to address the coming shortfalls in existing government programs. He would essentially forbid insurers to deny insurance to potential buyers. He says the way to solve the Medicare dilemma is to fix the reimbursement system, emphasize prevention, and encourage people to lose weight: “If we went back to the obesity rates that existed in 1980, that would save the Medicare system a trillion dollars.” On Social Security he at least acknowledges the need for hard choices: He would raise the current $97,500 ceiling on income that can be taxed. That’s not much, but it’s a start.

John McCain voted against President Bush’s Medicare Part D, which provides prescription-drug coverage for seniors. But he opposed a means test for Medicare benefits. More broadly, he proposes medical savings accounts, which would create an incentive structure designed to control costs. He takes a far more radical — and ultimately more realistic — approach to Social Security: He would allow contributors to invest a portion of their taxes in private retirement accounts. That would make the biggest difference to individuals’ financial security in the long term. In the short term, however, it would exacerbate the shortfall in the government program. Yet at least McCain would insist on ending the accounting fiction that borrows from existing Social Security surpluses to mask the size of the federal deficit.

Although McCain comes closest to offering straight talk on entitlements, none of the candidates seems willing to tell the public the blunt truth: The federal government has promised more than it can possibly deliver without either raising taxes to ruinous levels or siphoning so much money from other programs that entire departments would have to shut down. According to the Congressional Budget Office, if you add Medicaid into the mix with Social Security and Medicare and let all three run on autopilot, then by 2030 the three programs will consume 70 percent of the federal budget (up from the current 40 percent).

That is a recipe for disaster, which can be avoided only through a full-spectrum approach: cutting benefits, means-testing, raising taxes and contributions, and raising the retirement age. But the bulk of public attention to the presidential campaign so far has been devoted to petty sniping over minor gaffes.