The Big Lie of 2008.

January 09, 2008

'Change' For Our Children
By Robert Samuelson

WASHINGTON -- The big lie of campaign 2008 -- so far -- is that the presidential candidates, Democratic and Republican, will take care of our children. Listening to these politicians, you might think they will. Doing well by children has now passed Motherhood and Apple Pie as an idol that all candidates must worship.

"We will do whatever it takes to make America a better country, to give our kids a better future," says Mike Huckabee, winner of the Republican Iowa caucuses.

"We will deliver for our children, our grandchildren and our great-grandchildren," claims Sen. Barack Obama, the Democratic winner.


"We're going to reclaim the future for our children," says Democratic Sen. Hillary Clinton.

Actually, these are throwaway lines, completely disconnected from reality.

Our children face a future of rising taxes, squeezed -- and perhaps falling -- public services, and aging -- perhaps deteriorating -- public infrastructure (roads, sewers, transit systems). Today's young workers and children are about to be engulfed by a massive income transfer from young to old that will perversely make it harder for them to afford their own children.

No major candidate of either party proposes to do much about this, even though the facts are well-known.

Spending for Social Security, Medicare and Medicaid -- three programs that go overwhelmingly to older Americans -- already represents more than 40 percent of federal spending. A new report from the Congressional Budget Office projects these programs could equal about 70 percent of the present budget by 2030. Without implausibly large budget deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today's levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.

Similar pressures, though less ferocious, exist at the state and local levels. Schools, police, libraries and parks will be squeezed by the need to pay benefits for retired government workers. A study by the Pew Charitable Trusts found that states have promised retired workers $2.7 trillion in pension, health care and other benefits during the next three decades. Only about $2 trillion has been set aside; the rest would come from annual budgets.

Medicaid, a joint federal-state program with states paying about 40 percent of the costs, represents another drain; about two-thirds of its spending stems from the aged and disabled. Roads, water and mass transit might also be shortchanged. States and localities pay about three-quarters of their costs.

But facing these facts would expose candidates to three daunting problems.

First: Lightening the burden on the young requires cutting retirement benefits for the old -- raising eligibility ages, being less generous to richer retirees and making beneficiaries pay more for Medicare. Simply increasing taxes or cutting other programs won't work. The problem is not just closing the budget deficit.

Second: We can't wait. Ideally, prospective retirees would have received several decades' warning; but we've delayed too long. We need to cut benefits for baby boomers and even some existing retirees. They are the source of mounting costs.

Third: Even if retirement benefits were cut, pressures for higher taxes and lower public services would not disappear. Social Security and Medicare are part of the nation's social fabric. Although individuals' benefits can be responsibly trimmed, the growth in the elderly population (a doubling by 2030) and rapidly rising health costs would still expand total spending. The increases would simply be smaller.

A moral cloud hangs over our candidates. Just how much today's federal policies, favoring the old over the young and the past over the future, should be altered ought to be a central issue of the campaign. But knowing the unpopular political implications, our candidates have lapsed into calculated quiet.

They pay lip service to children but ignore the actual programs that will shape their future. The hypocrisy is especially striking in Obama. He courts the young, promises "straight talk," and offers himself as the agent of "change." But his conspicuous omissions constitute "crooked talk" and silently endorse the status quo.

The insidious nature of this problem is that because the spending increases for the elderly occur gradually, the pressures on taxes and other government programs will also intensify gradually. A crucial moment to clarify the stakes and compel politicians to make choices probably won't occur until it's too late.

The longer we delay -- and we've done so now for several decades, because the strains created by an aging society have been obvious that long -- the more likely that eventual "solutions" will be unfair to both young and old. To acknowledge that and to come to grips with it would constitute genuine "change."