Monday, October 29, 2012

Theories of entitlement spending

John Goodman has a post on "grand bargains" in which he discusses entitlement reform.  I certainly agree with his analysis that raising tax has historically been easier than cutting entitlement spending, and that this should be a cause for concern.  Of more interest, however, were his positions on entitlement reform, which seemed a bit extreme for me.
Fundamental reform of Medicare and the elderly portion (which is most of the total) of Medicaid needs to proceed in much the same way. Young people need to start saving right now to pay for their health care and their nursing home needs during the years of their retirement. We also need to create more private sector options so that seniors have access to the same kind of health insurance the rest of the nation has access to (a la Paul Ryan).
The Democrats, however, will have none of this. Their idea of Social Security reform is raising the retirement age, reducing the rate of growth of benefits, raising the maximum wage subject to the payroll tax, etc. In other words, they want to tinker around the edges. And while they are perfectly willing to allow increasing the payroll tax on higher-income taxpayers immediately, all the spending reductions must only apply to future retirees, not current ones.
While cutting entitlement spending seems necessary, I prefer the idea of tinkering around the margins, since I support the basic concepts behind them.  Social Security should provide financial security for people who are too old to work or who have outlived their usefulness in the labor force.  Raising the age for Social Security is justified because people live longer and healthier lives than they did when it was originally enacted.  By raising the minimum age, we would be keeping the Social Security closer to the fundamental purpose of the law, tweaking an old law to fit our changed world.

Is Goodman's position--eliminating Medicare almost entirely--the mainstream libertarian position?  Am I misreading his argument?

1 comment:

  1. I think youre misreading his argument. He seems to be advocating for something between Bush's SS plan, which did not eliminate SS, and Ryan's Medicare plan, which doesnt eliminate Medicare.