Most of us realize that through the government We the People spend too much money relative to the taxes government collects.
Our budgets don't ever balance because government always outspends the taxes collected. This long established tradition of "drinking champagne on a beer budget" happens each year, and it's reached the point where our national debt is now at dangerously unsustainable levels.
At the outset, let's be clear. Taxing the "rich a little more," as President Obama likes to say, won't solve our problems. In fact, taxing the so-called rich a whole lot more won't even come close to solving them.
And here's the political landscape. We the People want to pay low taxes and then enjoy generous retirement benefits like Medicare and Social Security. We even like to tell ourselves that we've earned or paid for the benefits we receive, even though we haven't come anywhere close to doing so.
The politics of taxes and entitlements are straightforward. Republicans resist increasing taxes and Democrats resist reducing benefits for entitlements like Medicare and Social Security. Of course, to loyal voters of both political parties, low taxes and big entitlements, at least at first blush, appear to represent the best of all worlds. It may even be a better deal than what our "socialistic" friends in Europe receive, since our taxes are lower.
The problem, of course, is that this well entrenched imbalance of government receipts to expenditures is unsustainable. And to repeat, raising taxes on 2% of the high earners, either by a little bit or even a whole lot, won't fix our huge and recurring annual deficits and ever increasing growing national debt dilemma.
So what will we do and when will we do it? Well, AARP, the 37 million strong member lobbying group for the oldsters, proposes that we do NOTHING for now. Just say no, in other words. Implicit in their stance is that we'll just leave it up to our kids and grandkids to solve.
As an oldster, father and grandfather, I'm embarrassed by the hardline AARP postion. In fact, I'm even angered.
AARP Opposing All Medicare Cuts says this:
"AARP and other seniors groups have drawn a hard line against major changes to entitlement programs, a stance that could complicate the White House and Congress's efforts to strike a budget deal.
The main lobbying groups for older Americans say they are opposed to any changes in Medicare and Medicaid that would cut benefits or increase costs for those participating in the two government-run health programs. They also oppose cuts to Social Security, as they did in 2005, though changes to that program have received less attention in deficit-reduction talks.
AARP's stance on health programs rules out most of the deficit-reduction proposals favored by Republicans, including shifting recipients to private insurance coverage and a slow increase in the Medicare eligibility age to 67 years old from 65. It also puts off limits changes that have won limited support from some Democrats, such as increased Medicare payments by higher-income enrollees, or restrictions on private supplemental Medicare plans that cover more of a policyholder's costs.
For now, the no-compromise position is paying off for the seniors' groups. The White House has so far been parsimonious in its offer on entitlement programs. But that stance is a source of friction with Republicans, who say bigger changes need to be on the table for a deal to be reached by year's end. . . .
The power of AARP gives it considerable muscle in shaping a package to avert the tax increases and spending cuts set to begin next year. Founded in 1958, the group evolved from an association to help retired teachers get health insurance into a lobbying juggernaut that now counts 37 million members.
The White House leaned heavily on AARP to help make a case to seniors that the 2010 health overhaul wouldn't harm Medicare. Many seniors didn't buy it, and the group has said that its support for the law cost it about 300,000 members.
Now AARP is pointing to the health law, which includes $716 billion in cuts to Medicare over a decade, as a reason that seniors shouldn't accept further changes to the program. Those cuts will largely hit hospitals and insurers.
"Medicare has already contributed a lot in savings," said David Certner, a top lobbyist for AARP....
Max Richtman, head of the National Committee to Preserve Social Security and Medicare, said that he and other groups supportive of President Barack Obama met him a week after the election and came away reassured. "He made it clear that he would do everything he could to protect the beneficiaries of these programs," Mr. Richtman said.
The White House says Mr. Obama is willing to make some changes to Medicare that could save up to $400 billion, including increased payments from wealthier seniors. Around a quarter of his savings would come from allowing Medicare to negotiate prescription-drug prices, which has widespread support from liberal and senior groups.
AARP has been working all year on a "You've Earned a Say" campaign opposing cuts to entitlement programs. The group is running television advertisements on network news and cable lifestyle programs through the next two weeks that open: "Some politicians seem to think that Medicare and Social Security are just numbers in a budget" and end: "We can do better than a last-minute deal that would hurt all of us."
The group has faced criticism from members in the past when it has been perceived to have done too little to protect the economic status of its members. Last year, its longtime policy chief John Rother quit after suggesting that some cuts in Social Security benefits could be acceptable.
Mr. Certner said AARP might be willing to contemplate some cuts to the Medicare and Medicaid programs next year, but that it favored smaller proposals to change the way care is delivered, or to require Medicare to negotiate with pharmaceutical companies over prescription-drug prices."
Here's the problem in a nutshell.
We can't afford to maintain the entitlement programs we have in place without big across the board tax increases. We simply haven't funded these programs adequately over the years. And now that the baby boomers are retiring in record numbers, the problems will get worse each day. Until they become virtually insoluble because nothing was done while there was still time to make things right.
That's especially true for Medicare spending, but it's also the case with Social Security. Both are "evils," but Social Security is the lesser of the two. Small comfort.
Thus, we must agree now to "not too far down the road" (1) raise overall taxes dramatically across the board, (2) curtail future spending on entitlements programs in a serious way, or (3) choose to go on our merry way and leave it to future generations of Americans to pay our delinquent bills.
Of course, the popular political "solution," other than doing nothing, will be to make the 2% defined by President Obama as rich pay more taxes and let everybody else, aka the 98% of voters he's labeled as the "middle class," avoid either any increase in taxes or reduction in promised benefits. And while that's the popular political way forward, it won't solve the problem. Not even close.
Unlike the AARP, I'm all for "means testing," and requiring the so-called rich people to pay more for these old age related benefits. Perhaps even forfeit them entirely if that's part of a genuine long term solution to our entitlements affordability issues.
I'm also very much in favor of allowing current workers (young, middle age and old alike) to opt out of these government programs and choose to take care of themselves rather than have the government, aka their fellow taxpayers, take on the responsibility to do so.
My take is this --- AARP's approach amounts to stealing from future generations to pay for the benefits of current and future retirees. It's stealing because not enough money has been or is being set aside to meet the programs' future obligations.
So while AARP endorses the stealing approach, I propose we start telling ourselves and each other the truth. It's an intergenerational thing.
There is no trust fund with money in it to pay these benefits. The benefits are paid by the current contributions of today's workers. That simply means that what is contributed is being spent on current benefits and not able to be invested for the purpose of paying future benefits.
Accordingly, none of the current payroll contributions will be available to pay the current workers' retirement benefits in the future. Sad but true. And here's some more truth.
It's as simple as 1-2-3-4-5.
(1) The AARP argument (and others who argue that as well) that there has been sufficient money set aside to pay our Medicare and Social Security benefits just isn't true. They're paid by the contributions of current workers.
(2) And even when we accept as fact that the government knows best gang didn't collect enough money to properly fund these programs over the years, these glad handing politicians were acting in their capacities as our duly elected "public servants."
Thus, as our representatives, their malfeasance became our malfeasance. And even if we reject that "acting on our behalf" line of reasoning, there's still no money in the government till, other than the constant flow of current payroll contributions of today's workers.
(3) And one more thing while I'm at it. There is no "they" when referring to We the People and our government. They are we and we are they.
As Pogo said, "We have met the enemy and he is us."
Thus, it's very much we who are continuously spending more than we're collecting in taxes. And it's we who are promising to pay ourselves future benefits without providing the means to pay for them. It's not "they."
(4) AARP is an irresponsible dues collecting political lobbying organization that panders to the wants and desires of its 37 million members. Otherwise it would have no members to pay its dues and the salaries of its leadership.
We need less political opportunism and more of a long overdue candid discussion between the generations concerning our nation's entitlements funding fiasco. The problem will neither go away nor solve itself anytime soon.
We the People have to lead the charge to get this job done. Young, middle age and old alike, holding hands as we go.
(5) We are where we are as a nation financially because we like to spend more than we like to pay in taxes. And our politicians don't have the guts to tell us the truth.
They want to keep their jobs too much to openly tell the truth. And unfortunately, too many of We the People prefer not to hear the truth about the unaffordability of our entitlements.
By far the biggest source of our overspending in relation to taxes paid is medical care. In that regard, the Medicare problem must be solved before we can hope to successfully address our financial woes in total.
Meanwhile, Social Security is a financial ticking time bomb as well. And there are lots of other smaller ticking time bombs out there, too.
So while we may not want to hear what the AARP and others aren't telling us, those are the simple facts.
And as President Bush #1 liked to say, "Facts are stubborn things."
Oh, and one more thing, fellow oldsters. Please don't hate me. I'm only telling it like it is.