Health care and Social Security programs have added up to a clever Ponzi scheme ever since the New Deal, with young workers paying for the unfunded health and retirement obligations of their parents’ generation.
[Moody’s Investors Service’s] announcement that entitlement programs will soon be unsustainable is neither new nor surprising. For decades, serious observers have known that federal health care and Social Security costs would explode when the baby boomer generation began to retire in large numbers.
For the foreseeable future, the size of the retirement population will grow more rapidly than the work force, and health care costs for elderly individuals are skyrocketing. Federal estimates of the revenue shortfall are $45 trillion during the next 75 years, up from $27 trillion in just 2003. Without substantial changes, our federal finances are insolvent.
The Ponzi scheme initiated during the New Deal is no longer sustainable. Long-term investments denominated in dollars increasingly suffer from the overhang of federal entitlement spending.
Bipartisan blue ribbon commissions of experts have convened many times and made sensible recommendations. President Bush invested substantial political capital in Social Security reform between 2003 and 2006, all apparently for naught. Congress, which wrote the laws leading to unsustainable health care and Social Security programs, does not appear to be interested in avoiding the fast-approaching financial calamity.
Moody’s understands what Congress does not: Unsustainable entitlement programs do more economic harm than good. Among the presidential candidates, only Fred Thompson has made Social Security reform a central issue, and none has made Medicare reform central. …
[Hillary] Clinton and others in Congress have called for oversight hearings into the regulation of private financial practices at institutions such as Citigroup. Congress would do well to put its own financial practices in order before lecturing the private sector, and primary voters would do well to take a careful look at candidates’ promises.
Read more at hudson.org.
