Time to redefine entitlements
Commentator Steve Moore
TEXT OF STORY
SCOTT JAGOW: $80 trillion. That's how much the US government needs to pay future Social Security, Medicare and Medicaid benefits. To put that in perspective, $80 trillion is six times the size of the US economy. President Bush and some in Congress are still hoping for a deal to reform the entitlement programs. Commentator Steve Moore believes there is a way out of this financial mess.
STEVE MOORE: The entitlement crisis is enormous, but it is solvable with a little common sense.
Economic growth is one key. America's economy has been growing at a fast clip for the past 25 years. If we keep growing at the current pace, in the next few decades our economy will swell to twice its size and our wealth will be three times bigger.
That will help a lot in paying Uncle Sam's bills.
And let's not forget we've got a trump card: immigration. America attracts young and mostly hard working immigrants who will help pay our retirement benefits.
But we still need to downsize our bills. If we tried to raise taxes to pay for all our entitlements to the elderly, we'd have to double income taxes, corporate taxes, gas taxes and payroll taxes. That really would capsize our economy.
So sooner or later, Congress will have to rein in the cost of our runaway entitlement programs.
The Supreme Court long ago ruled that no one has a legal right to Social Security or any government benefit. Promises are just that, promises. Congress can make laws. Congress can easily change them.
That's one reason why allowing workers to tuck away Social Security payroll taxes into a private account is a very good deal: It transfers political promises into legally-owned private assets.
Next, we need to convert Medicare and Social Security into safety nets not universal entitlements.
Wealthy older Americans, like Warren Buffett and Ross Perot, should rely on their own private savings and health benefits.
And life expectancy is growing. So, let's raise the retirement age for government benefits to at least 70. We can't be an economic superpower if we have more people retired than working.
All of these policy changes are coming eventually as sure as the sun will rise in the morning. Making those changes now will mean that our long term financial picture will look bullish, not bleak.
We just need to grow up, before we grow old.
JAGOW: Steve Moore is a member of the Wall Street Journal Editorial Board.