President Bush will deliver his budget to Congress next week, which will be followed by 10 months of pandering, earmarking, name calling and fussing until Congress finally decides to . . . pass a continuing resolution in December and come back to fight again in January 2008.
What will likely not be part of the budget debate will be a serious discussion of the issue raised in Federal Reserve Bank Chairman Ben Bernanke’s January 18 congressional testimony: the financial unsustainability of the country’s entitlement programs. Said Bernanke:
- Official projections suggest that the unified budget deficit may stabilize or moderate further over the next few years. Unfortunately, we are experiencing what seems likely to be the calm before the storm. In particular, spending on entitlement programs [Social Security, Medicare and Medicaid] will begin to climb quickly during the next decade. . . By 2030, according to the CBO, they will reach about 15 percent of GDP. As I will discuss, these rising entitlement obligations will put enormous pressure on the federal budget in coming years.
The chairman concluded:
- Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the Administration, and the American people. However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost. The decisions the Congress will face will not be easy or simple, but the benefits of placing the budget on a path that is both sustainable and meets the nation's long-run needs would be substantial.
Leave it to an unelected economist to be the skunk at the party. But notice in the testimony there is a call to action: “if early and meaningful action is not taken. . .”
So the question is who will lead in taking that early and meaningful action?
Probably not President Bush. He tried to reform Social Security and took a beating. And even though his heart is still willing, his political capital is weak.
Nor are we optimistic that Congress will deal with this issue over the next two years. It will take a wait-and-see-how-the-elections-turn-out approach.
That leaves us with the presidential candidates, and three questions:
- Which candidate will call the public’s attention to these fiscal problems and dedicate him(her)self to fixing them?
- Which candidate will propose a clear and thoughtful market-oriented blueprint on how to deal with the entitlements?
- And who will propose that plan before the election so voters can include that information in their decisions?
Entitlement reform is the most important domestic policy challenge facing this country. Leaders don’t stand back to see what the public wants; they lead. And if they lead well, the public will follow them—all the way to the White House.