ConservativeHome's The Republican

Washington's attempt to make the middle class dependent on government will un-do us all in the end if we don't act soon

Ryan Streeter

Yesterday I looked at Washington’s war on the young, and on Wednesday the topic was Washington’s war on the poor. If you’re not young or poor, you might be feeling left out. So, today’s post is Washington’s war on…you!

Let’s start with three basic facts and then tie them together with a few observations:

• In ten years, when this year’s Obama budget will have added $26 trillion in additional debt to our economy, every single baby boomer will be above 55 years of age (the first wave of boomers to reach retirement age has already arrived). And remember, they’re called baby boomers because they were a baby boom – meaning, there were a whole bunch of them. Paying their Medicare and Social Security will drive up our deficit to unprecedented levels. The picture of our deficit as a percentage of GDP basically looks like this:

• 45% of government revenues, according to CBO, will come from individual income taxes in 2011. 37% of government revenues come from the payroll taxes you and I and our employers pay. Only 9% comes from corporate taxes. In other words, if you think “big business” and all those corporations are footing the bill, they aren’t. We are. Taxes on individuals  are the primary fuel in the federal government’s engine. A lot of people think business pays a greater share than they do.

• Because (1) the retirement costs of boomers and subsequent retirees will burgeon uncontrollably (first bullet), and (2) the costs of all of this mess are born mainly by individuals (bullet 2), this means that (3) if we don’t reform the programs, we’ll all have to live with big spikes in our payroll taxes. Just look at Social Security (a minimal problem compared to Medicare). According to Andrew Biggs, if Congress is unwilling to change how the program works (how much it pays, and to whom), we’ll need to increase payroll taxes immediately from 12.4 to 15.7 percent, more than a one-quarter increase. If we wait, we’ll have to go up to 16.2 percent in 2020. And so it goes. You and I pay half of those payroll amounts, our employer the other half. I don’t think any of us is all that excited about watching our share jump by one-third.

Through out entitlement programs, we as a nation have become quite comfortable with social welfare for the middle class. Pretty soon, our transfers of taxpayer dollars to the retirement and health care of older middle - and upper middle - class people will outweigh whatever we spend on poorer people if it doesn’t already.

ObamaCare just took this one step further. Most of the criticism of ObamaCare from the right has had to do with the price tag and the government’s intrusion into the private health care market. But perhaps it’s most sinister element, in my view, is the way it sought to make middle class families dependent on government. It guarantees subsidies to 111 million Americans under the age of 65 for health insurance. This includes, for instance, a family of four earning $88,000 per year.

The co-opting of the middle class as a distinct social welfare group is the story of our generation.

There are many who will see no trouble with this and say, “Look, I’ve paid my fair share, so now it’s time for me to get my due” (and judging by mail I’ve received, there are conservatives who also feel this way).

But the first three bullet points above should make it pretty clear why the co-opting of the middle class has become a tragedy: we simply cannot afford it. We as individuals pay a big part of the bill each year, and we’ll all be paying a lot more very soon.

There is virtually nothing about the spending cuts debate in Washington right now that affects any of this.

Along with repealing ObamaCare, only reforming entitlements will do the trick. Fortunately, Republicans have said they’ll propose entitlement reforms in their April budget. They have not yet worked out which reforms, and how aggressive they will be. And, of course, we know they will be met with a firm "no" from the new Party of No, the Democrats, as Charles Krauthammer astutely calls them in his column today. This means the road to real reform will be bumpy.

So, in the meantime, we all have a role to play in telling lawmakers we’ll live with a reformed entitlement system in order to save our future. This will help give the politicians a push from you and me to do the right thing.

We have created www.PledgeByAmerica.org where you can sign up. Be sure to do so today!

Let's push Republicans in Congress to do the right thing and let's pledge to do our part to reform Medicare and Social Security

Ryan Streeter

If we don’t reform Medicare and Social Security – the dreaded “entitlements” – we won’t save our economy for our children. It would be good if we had some bold help on this front from Republicans in Washington.

By “whiffing” (to use Paul Ryan’s words) on entitlement spending in his budget, President Obama may have inadvertently strengthened Republican resolve to deal boldly with entitlements in their budget. Maybe.

The pathetic approach to fiscal discipline in Obama's budget has the Republicans spitting mad.

But even so, it’s been unclear to most just how far the GOP will go, and how bold they will be. They don’t agree among themselves about the wisdom of playing with Grandma’s security blankets while trying to unseat Obama in 2012.

But, last week, Eric Cantor’s office pushed back on a suggestion by Bill Kristol that Cantor may be prevailing over Paul Ryan in the latter’s desire to take on entitlement reform in the House budget in April (which certainly matches what I’ve observed and heard, too). Kristol writes, “Leaving entitlements on cruise control is not a serious position for an aspiring governing party.” Cantor’s spokesman referred readers to these remarks by the Majority Leader, which Kristol was kind enough to post and which portray Cantor’s intentions in a good light.

Now that Obama’s budget is out and facing fierce Republican criticism, John Boehner and Cantor have been on the spot in every interview and public event  with questions about what Republicans will do about entitlements. They’ve provided a number of assurances that entitlements will be “on the table” in Boehner’s words yesterday.

Paul Ryan signaled yesterday that the GOP has to deal with entitlement spending if it wants to show it is more serious about the deficit than the President. We assume he’s speaking for all of the leadership and not just himself, but…it is an assumption.

So, in the end, we can hope with some confidence that serious reform proposals are on the way.

It will require real leadership, though. The best words on this front today come from Matthew Continetti, who writes in the current Weekly Standard:

Republicans have… a chance to begin a public education campaign on the necessity and feasibility of reform now versus austerity later. This is an occasion where Republicans actually could govern according to conservative principles. It’d be an awful shame if they blew it…Opinion polls and the political dangers that accompany any discussion of entitlements have persuaded some conservatives that the GOP can afford to wait another two (four? six?) years to reveal its plans for Social Security, Medicare, and Medicaid. They’re wrong.

He's right: they're wrong. But that hasn't stopped policymakers from doing the wrong thing before. The more important statement he makes is that we need "a public education campaign."

Let's get as many Americans as we can to say they are ready for real reform. We at ConservativeHome have create the Pledge By America to allow you to do just that: say you are ready for real reform. Sign the pledge!

www.PledgeByAmerica.org

America Needs You!...To help Congress do tomorrow what it should have done yesterday

Ryan Streeter

Remember these numbers: 4.8, 5.7, 7.9, and 12.3

Washington is abuzz with critiques in the wake of a truly horrible budget put forward by our President yesterday.

President Obama’s lack of moral seriousness in his State of the Union was matched by a budget in which all of his claims about fiscal discipline are overshadowed by the reality that this budget will make our already-bad deficit much, much worse.

To avoid appearing impolitic, Republican leadership is saying the President needs to take the first step on entitlement reform, which everyone knows is the long-term killer. But they know he won’t, and they also know that the $100 billion they are desperately trying to appear resolved to cut won’t matter much in the long-term. So what are they doing? They know, as the President does, that the first actor to step forward and propose a plan on entitlements will take the most fire.

So how long do we have to wait before someone has enough courage to step up and put forward a bold plan?

This brings us back to the numbers above.

The Congressional Budget Office has laid out the effects of waiting too long to tackle the deficit. The numbers above are the percentage of GDP that we would have to cut or increase through taxes or both in order to close our fiscal gap. Here's how the percentages look depending on which year we decide to start reforming the programs:

• Start reforms in 2011 – 4.8% of GDP
• Start reforms in 2015 – 5.7% of GDP
• Start reforms in 2020 – 7.9% of GDP
• Start reforms in 2025 – 12.3% of GDP

If you think Congress and the President will somehow “get it” when things are bad enough and start making the needed reforms, take a look at the CNN video yesterday which shows presidents going back to Nixon saying they’ll get serious about deficit reduction.

The difference between the past and now is the math. We truly will be crushed, soon, if we don’t start making the changes.

Which brings me to the title of this post. America needs you!

Democrats will demagogue entitlement reform and start scaring Grandma about the bad things Republicans plan to do to her. Republicans will continue to have internal disagreements about what’s feasible to propose before 2012. And then, after 2012’s elections, they will disagree about how aggressive to be – for other reasons.

America needs unelected taxpayers, “ordinary” people like you and me to do extraordinary things. We need to tell Washington that we want to see urgency, not just on spending cuts but on entitlement reform.

If enough of us pledge work longer, save more, and live with a reformed entitlement system, we can give lawmakers the courage to do now what the urgency of the hour required them to do yesterday: reform entitlements.

We have created a Pledge By America page where you can sign up. Send www.PledgeByAmerica.org around to your friends and have them sign up, too!

Pledge BY America: Greater freedom, more justice, and greater compassion can help us provide better support to seniors at a lower cost - Part 3 of 3 on fixing the deficit

Ryan Streeter

The Pledge By America is our commitment to our elected leaders that we'll do our part to fix the nation's deficit - and save our future.

Yesterday, I argued that we need to save more if we are going to be a deficit-killing generation. Before that, I talked about how we need to be self-sufficient and to work longer if we're going to get serious about our deficit.

Today, I hit on three critical components of reform. Here are the seven points of our Pledge, with today's components highlighted.

• I pledge to do all I can to be self-sufficient, and to raise children – if I have them – to be self-sufficient.
• I pledge to work until 70 years old.
• I pledge to save more of my income than I do now, by a few percentage points a year, to prepare for the future.
• I pledge to allow a portion of my payroll taxes to be deposited into a savings account for my retirement, rather than relying only on Social Security.
• I pledge to be a cost-conscious consumer of insurance and health care when I am age 70 and older, and to use a fixed contribution from the government each year to get the insurance and care I need rather than expecting the government to pay for whatever costs I rack up.
• I pledge to live with less from the government in retirement and health benefits if I’m fortunate enough to be well-off when I retire.
• I pledge to give more to charity, my place of worship, or elsewhere in my community to address the needs of those around me.

First, we need to pledge to be a cost-conscious consumer. What does this mean? In summary it means that we'll live with the government paying us an up-front amount rather than a back-end amount for our health care. Currently, the government tries to set prices, and then pays for whatever health care costs seniors rack up. If we're going to slow the growth of Medicare, we need to reverse this. We should all get an annual amount of moneh from the government up front that we manage. That means: we purchase our own insurance and pay for our own health care. Market forces, which don't currently exist to any significant degree in Medicare, will keep costs down through competition - as in any other part of the economy. Providers willl get paid for how well they do, rather than for how many people they can see (as things go currently). This is probably the single most imporant element of successful entitlement reform.

Second, we need to means-test the programs. Means-testing is this: you pay out benefits to people based on how much money they've got. If you're rich, you get less. If you're poor, you get more. Currently, millionaires get Social Security and Medicare regardless of their wealth. What this really means is that younger workers making a lot less than their richer elders are supporting the latters' retirement. Shouldn't we be focusing our resources on those with the greatest need? Since that's not our current practice, we are effectively wasting a lot of taxpayers' dollars by sending them to people who don't need them. So let's change the law so that we target resources to those who need them the most.

Third (and this may be the most important of all), we need to help those around us. A truly civil society is one in which the non-governmental institutions of church, neighborhood, community, and enterprise meet the needs around them without any "incentives" or coercion from the state. The more civil society we've got, the less state we've got. Entitlement reform should not be an effort to "offload" responsibilities to nonprofits, but it shouldn't shy away from them either. America has a long, Tocquevillian tradition of mediating the costs and role of the state through a vibrant network of formal and informal civil society institutions. If the next generation is more intentional about giving and volunteering than the previous generation, the effects will be less need for the state.

These three components are essential ingredients for reform. They are also based on the idea that by increasing freedom, justice and compassion in our approach to our older fellow citizens, the care will be better and the costs lower.

A Pledge By America, not the Pledge To America, is what will save our nation's future

Ryan Streeter

Today at FoxNews.com I have an opinion piece that makes the case for a Pledge By America. The Pledge is a fairly obvious play off the Republicans’ Pledge To America that they unveiled last fall.

The Pledge By America uses a simple idea to address a very complex problem. The Pledge is a way for American citizens to say they will do their part to tackle the deficit if Congress will do its part.

ConservativeHome invites Americans of all walks of life, and all ages, to sign the Pledge.

Here’s why America needs the Pledge:

The deficit is complex, thorny, and ugly, because it requires us to do much more than cut spending to fix it. We can only fix it long-term if we reform our big entitlement programs, Social Security and Medicare, because they are the culprits running up our credit cards.  And to change our entitlement programs means to change what we Americans can expect them to do for us when we’re older.

Anyone under 55, but especially younger Americans – let’s say those under 45 – should start preparing for a very different future than the previous generation enjoyed. Any successful reforms (by which I mean changes to the programs that make them solvent) will require some combination of raising retirement ages, targeting benefits to those who need them most, and limiting the amount the government can pay out in favor by creating a system that defines how much seniors get each year.

This means that: we’ll have to work longer since we live longer; we’ll need to save more, both on our own and through whatever private account system the government can set up for us to deposit some of our payroll tax into; we’ll need to expect to receive less the more we’ve made in our careers; and we’ll need to get used to the idea that we’ll do more “shopping” for health care with a limited amount to spend than just going to whatever doctor expecting the government to foot the bill.

Now, Congress is reluctant to implement these reforms because doing so is political dynamite. But the longer we wait, the higher our taxes, the deeper the cuts to the programs, and the unhappier the public. So, the Pledge is a way for a new “greatest generation” of Americans to stand up and say, “OK, we get it. We’ll do our part to change our expectations about the future so the politicians can muster the courage to do the right thing and change the laws.”

The Pledge By America has 7 points:

• I pledge to do all I can to be self-sufficient, and to raise children – if I have them – to be self-sufficient.

• I pledge to work until 70 years old.

• I pledge to save more of my income than I do now, by a few percentage points a year.

• I pledge to allow a portion of my payroll taxes to be deposited into a savings account for my retirement, rather than relying only on Social Security.

• I pledge to be a cost-conscious consumer of insurance and health care when I am age 70 and older, and to use a fixed contribution from the government each year to get the insurance and care I need.

• I pledge to live with less from the government if I’m fortunate enough to be well-off when I retire.

• I pledge to give back to my community to address the needs of those around me.

Each of these 7 points matters a great deal. They are the stuff of personal responsibility, fiscal prudence, shared sacrifice. They require the values and habits we often associate with the last “greatest generation.”

I will take Wednesday through Friday to work through each of the points, so be sure to come back.

In the meantime, if you're persuaded by the need for the Pledge, sign it here.