They've been likened to a narcotic that clouds the mind, but government entitlement programs are far more dangerous. In May, the International Monetary Fund ranked the United States second among countries that must reduce deficits caused by entitlements or face grave financial problems when government debt equals 100 percent of the gross domestic product by 2015. In short, there is no time to waste; the next Congress must reform entitlements.
Retirees are now eligible for Social Security checks and health care benefits through Medicare or Medicaid. According to the Heritage Foundation, these programs make up 41 percent of all noninterest federal spending. But that percentage will grow massively in the next two decades as 10,000 baby boomers a day retire and apply for promised benefits. More than a few of these coming beneficiaries won't need such benefits, yet the rich and very rich will continue receiving benefits like subsidized prescription drugs through Medicare Part D.
But the fact these entitlement programs pay certain benefits to some who don't need them isn't the heart of the problem. These programs are unaffordable because far more benefits have been promised than taxpayers can support, barring ruinous tax increases. Social Security's revenues are expected to fall short of promised benefits this year; the same day of reckoning comes in 2017 for Medicare.
The problem will only get worse without concrete reforms now because politicians will go on promising more benefits without providing ways to pay for them. This is why Heritage's Index of Dependence on Government grew by 13.6 percent in 2009, from 239 to 272, mainly because of expanding entitlements. Worse, as dependency has grown, the number of people who don't pay taxes have also increased — jumping from 14.8 percent in 1984 to 43.6 percent in 2008.
What is to be done? The Examiner recommends the following as essential first steps to a long-term solution:
Increase the retirement age: When Social Security began, U.S. life expectancy was 62 and few people lived to 65 to receive full benefits. Today's life expectancy is 78. People live longer, work longer and are healthier; eligibility standards should reflect this reality.
Show us the money: By accurately and fully reporting the long-term obligations of entitlements in the budget, which Congress doesn't currently do, the American people will have a clearer picture of their obligations. Further, any measure that would increase an entitlement should require a stand-alone vote.
End automatic benefit increases: The fact that entitlements grow automatically without prior congressional and presidential approval is a key reason they have become so unsustainable. No more COLAs.
Means-test benefits: Stop providing benefits to all retirees with no regard for either individual means, place of residence, or ever-increasing life expectancy. Guarantee current benefits to everybody age 55 or older, but create alternatives for everybody else, including health care insurance vouchers, percentage set-asides for individual investment of Social Security taxes, and expanded tax credits for IRAs and similar accounts.
The reality is stark: Congress can no longer pass the buck on entitlements. These are tough decisions, but that's what we pay our senators and representatives to do. It's time they do their jobs.