Sunday, August 01, 2010

Debt & Social Security Again

Here we go again. An editorial in the New York Times today, one of those where authors are not named, is about spending and the federal deficit. To its credit, it does at least imply that we should be doing stimulus spending now and worry about the deficit later, a point of view about which I have decidedly mixed feelings, but it is about reducing the deficit and in the discussion on spending it includes Social Security and Medicare.

Spending on the biggest items in the budget (Medicare, Medicaid and Social Security make up about 40 percent) cannot be quickly cut back without unraveling the programs and inflicting deep and needless hardship on their beneficiaries. In the longer term, starting around middecade, Washington will have to begin wrestling the costs of these programs down, or the country will face an even bigger deficit crisis.

As I have discussed, Social Security and, for the most part, Medicare are not a part of the federal budget, and cutting them will not reduce the deficit.

Finding deep, near-term savings will not be easy for one basic fact: the largest chunk of the budget — the 40 percent going to Medicare, Medicaid and Social Security — is the most difficult to cut, politically and for sound policy reasons.

And, once more in unison, because they are not actually in the budget and cutting them would not cut the federal deficit or reduce the national debt.

1 comment:

bruce said...

At the risk of inciting ire, rebuke and high blood pressure in Jayhawk, since the trust fund was essentially replaced with IOU's, and the IOU's have to be paid back, doesn't that create an additional burden on the Treasury and in effect make less money available for other things? and Thus need borrowing and adding to the federal defict?

Or maybe I'm missing something? I did not take Econ 101, not that I remember anyway. But the gist of it ought to be understandable. Of course, that also leads to corruption and manipulation, especially by politicians with agendas.

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