The Elder Share
ONE OF the great feats of social engineering in the last 25 years has been a huge increase in the standard of living of the elderly. Social Security and Medicare have been the means. The elderly had a poverty rate of 25 percent in the late 1960s. It is half that now, and lower than the rate for the society as a whole, thanks mainly to increased Social Security benefits. In addition, thanks to Medicare, the elderly are now the group in society with the most comprehensive health insurance.</br></br>The problem with these programs is not the benefits they confer, but the cost. They have come to dominate, if not the government itself, most certainly its budget. Aiding the elderly is now the main thing that the federal government does; such aid accounts for fully half the budget for other than interest on the debt and defense. The share can only rise as the baby boomers retire in the years ahead - but the money to support such an expansion is not in sight.</br></br>The taxes presently in place won't cover projected Social Security costs when the boomers retire early in the next century. The Medicare trust fund will be exhausted even earlier. To protect the long-term integrity of both, Congress will sooner or later have to raise taxes or cut costs; if costs, it ought to begin a gradual process now.</br></br>The trust funds are one source of pressure on the elder-programs; the other is the budget deficit. The president and Congress took a welcome step toward reducing it last year; they need to do more. A favorite target of budget-cutters is the spending category called entitlements. Their semi-automatic growth each year is taken as proof of the indiscipline the budget-cutters mean to cure. Which is fine, but it, too, is a euphemism. Entitlements turn out to be 60 percent aid to the elderly by another name. Congress keeps threatening to impose entitlement caps in the abstract, and now there is also an entitlements commission. But entitlement-cutting is mainly a way of discussing in general and in code a subject that the politicians would do better to discuss directly.</br></br>Thus a leading budget-cutting proposal now making the rounds is to cut the cost of entitlements across the board by means-testing them. Among the proponents is the budget-balancing group called the Concord Coalition. The idea is that a hard-pressed government has no business paying benefits (or asking middle-income taxpayers to finance benefits) for people above certain income cutoffs. For recipients with incomes above, say, $40,000 a year, entitlements (including Social Security benefits and the insurance value of Medicare) would be progressively reduced, though never wiped out entirely.