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Reason Foundation

Entitlement Reform? Not Their Cup of Tea

Tea Party candidates are backing off from serious spending cuts

Shikha Dalmia
November 1, 2010

Anyone who has not been living under a pumpkin lately knows that the single, biggest threat to this country’s economic future is its gimongous (hey, if Sarah Palin gets to invent words, why not me!) entitlement state. The massive unfunded liabilities of Medicare and Social Security are a noose around this country’s economic neck that tightens every passing day that nothing is done. Given this backdrop, the Tea Party movement’s raging about out-of-control federal spending and the need for fiscal discipline might seem like just what the doctor ordered, right?

Wrong. Actually, the handling of this issue by the Tea Party and its anointed candidates might have arguably set the cause of entitlement reform backward—not forward—in this election.

First some gory details about entitlement spending: As the 78 million baby boomers begin retiring over the next few years, under business-as-usual scenarios, spending on their Social Security and health care will more than double by 2050 to about 18 percent of the GDP. By 2052, Uncle Sam’s three entitlement programs—Social Security, Medicare, and Medicaid—will consume all federal tax revenues, leaving nothing for government’s core, constitutional functions. America will have to either mortgage its entire economy by 2042 or raise federal income taxes by 81 percent in order to pay for the $107 trillion in health care and pensions it has promised seniors. Add to all this the 30 million uninsured Americans whom ObamaCare has put on Uncle Sam’s insurance card and you have the makings of the fiscal equivalent of Nightmare on Elm Street.

The country’s fiscal prognosis is so scary that even some members of Obama’s economic team are showing signs of waking up and taking note. Take, for example, the president’s Stimulator-in-Chief, Treasury Secretary Tim Geithner. Geithner has yet to encounter an economic woe anywhere in the world that a good dose of stimulus can’t cure, its fiscal side effects be damned. He is to the cause of global stimulus and bailouts what Bush was to the cause of global democracy. But America’s deficit—thanks to stimulus and entitlement spending—is reaching such unsustainable heights that even Geithner recently applauded the Tea Party movement on NBC’s Meet the Press for raising public awareness about the problem, noting that this would be “helpful when we move to try to make the hard choices to get them (deficits) down again”—a veiled reference to cutting retirement benefits or raising taxes to pay for the entitlements.

But Geithner is way too optimistic—and wrong.

For starters, polls by the New York Times and Bloomberg have found that although a vast majority of Tea Party supporters favor smaller government, they don’t want cuts in their Medicare or Social Security, a contradiction perfectly captured in a sign at a Tea Party rally: “Keep the Guvmint out of my Medicare.” Indeed, the Bloomberg poll discovered that even though Tea Partiers dislike ObamaCare, they want Medicare to offer more drug benefits and the government to force insurance companies to cover pre-existing conditions. The upshot is that while the rhetoric on entitlements has become bolder during this election, the discussion about reform has become tamer.

In fact, setting aside the lapsed witch of Delaware, Christie O’ Donnell, in the most visible Senate races where Tea Party or Tea Party-anointed candidates are running, only two have stuck to their crosses on entitlement reform. One is Joe Miller of Alaska, a man so unfamiliar with the First Amendment that he conducted a citizen’s arrest of a reporter for asking tough questions. The other is Sharron Angle of Nevada, a genuine bright spot in an otherwise bleak Tea Party landscape, who admirably admonished Harry Reid to “man up” and admit that Social Security had a problem.

Literally all of the others are equivocating if not completely backing off from their original plans to give at least partial ownership of Medicare and Social Security to individuals themselves—the only realistic way of limiting the government’s liabilities without completely screwing over future seniors or taxpayers or the economy. In a painfully embarrassing exchange with Fox News host Chris Wallace, California’s Carly Fiorina found every which way to wiggle out of answering how she plans to control federal spending without entitlement reform, even accusing Wallace of asking her a—heaven forbid!—“political” question. Meanwhile, Florida’s Marco Rubio and Connecticut’s Linda McMahon have both been turned from macho to mush by this issue.

But Kentucky’s Rand Paul, who is running as an uncompromising apostle of limited government and free markets, has pulled the most distressing switcheroo of them all. A doctor himself, he denounced Medicare as socialized medicine. Yet he has balked at the idea of cutting physician salaries, even though American physicians make twice as much as doctors in OECD countries. Why? Because their cartel, the American Medical Association, both restricts the supply of physicians through insanely restrictive licensure requirements and controls the Medicare board that determines physician compensation, as the Wall Street Journal reported this week. Yet, Paul now maintains: “Physicians should be allowed to make a comfortable living.” (But he is just being fair—not pleading for his special interest of course!) Likewise, after calling Social Security a Ponzi scheme, Paul is now talking less about reforming it and more about protecting it for those now reaching retirement age.

To be sure, much of this backsliding is in response to attacks by Democratic opponents who are undoubtedly worse and shamelessly demagoguing the issue. Still, the fact of the matter is that instead of pulling Democrats in the direction of reform, the Tea Party candidates themselves are moving in the direction of the status quo. This wouldn’t happen if these candidates could count on a strong and large constituency for reform within their own movement. Elections are a discovery process through which candidates find out what their base really wants. And what many of the Tea Party candidates have found is that when push comes to shove, their backers want to protect their entitlements as much as the next guy. In fact, much of the fury of the Tea Partiers against government stimulus and bailouts might have less to do with any principled belief in the limits of government and more to do with fear of what this will do to their own entitlements.

If that’s the case, then it is safe to assume that the cause of serious entitlement reform is DOA in the next Congress—regardless of whether Tea Party candidates win or lose on Tuesday.

Shikha Dalmia is a senior analyst at Reason Foundation and a Forbes columnist. This article originally appeared at Forbes. This column previously appeared at Reason.com.


Shikha Dalmia is Senior Analyst


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