Critics of Congress and the administration are saying the fiscal cliff fix didn’t do anything about entitlements, and thus didn’t help rein in government costs at all.
That’s hogwash. “Entitlements” such as Social Security and Medicare aren’t entitlements so much as they are fulfillment of contracts.
The vast majority of those receiving Social Security paid into it most, if not all of their working lives. The same is true of Medicare.
In the 1980s, Social Security taxes were increased slightly while eligibility age went up a bit and the result was a growing trust fund for that program.
Such adjustments may have to be made again to assure those now working and paying will receive promised payments, and also to recognize the fact that many people are working longer and living longer than they used to.
Medicare also needs increases. Private insurance rates rise like bread dough every year to cover increasing medical costs. Medicare rates need to rise as well to take into account the fact that most of the heavy spending on health care for the elderly is done in the last months, weeks and days of life. Private health insurers recognize this and increase their rates accordingly. Why shouldn’t Medicare do the same?
People don’t like to pay higher rates, and you will hear them gripe to their members of Congress if rates go up. But you will hear them gripe louder if refusal to raise rates leads to bankruptcy of those programs.
Here’s another reason to howl — Social Security payments are immediately invested in U.S. government bonds. But when Congress borrows all that money, it eventually must be repaid. Congress loves to borrow, hates to repay.
Here’s how Congress operates: The great fiscal cliff fix was in fact packed with more pork than a sausage factory. What are we going to do with these people?