The official, head-to-head debates begin next week, but Sunday’s “60 Minutes” appearances by President Barack Obama and Governor Mitt Romney (R-MA) provided a contrast in the ideas offered on the nation’s entitlements and spending crisis.
For his part, the President punted on a serious question about the nation’s concern over spending—blaming everything on President George W. Bush. Instead of addressing the spending question, he waited for the next question about the national debt, which has increased more than 50 percent since he took office. Then came the familiar refrain of why he’s not responsible for Washington’s overspending or the country’s abysmal fiscal situation:
When I came into office, I inherited the biggest deficit in our history. And over the last four years, the deficit has gone up, but 90 percent of that is as a consequence of two wars that weren’t paid for, as a consequence of tax cuts that weren’t paid for, a prescription drug plan that was not paid for, and then the worst economic crisis since the Great Depression.
These continued excuses ignore the massive increases since the President took office. According to Heritage expert Emily Goff: By fiscal year 2008, the deficit had reached $458.6 billion. The deficit was increasing as Obama came into office, mainly driven by the recession and the first wave of TARP bailouts. But his Administration’s massive stimulus bill sent spending into overdrive and led to a record $1.4 trillion deficit for fiscal year 2009. Deficits have stayed at more than $1 trillion each year since then.
America’s entitlement programs are the major driver of out-of-control spending. Without reform, they would push federal spending to nearly 36 percent of the economy within a generation. Debt held by the public would explode to nearly 200 percent. Serious structural reforms are inevitable—it is merely a question of how we change what we are doing.
In his “60 Minutes” interview, Obama glossed over Obamacare’s cuts to Medicare and the resulting costs for seniors.
Romney, when asked how he would change Social Security, first made clear there should be no changes to benefits for those in or near retirement.
But he went on:
What I’d do with Social Security is say this: that again, people with higher incomes won’t get the same high growth rate in their benefits as people with lower incomes. People who rely on Social Security should see the same kind of growth rate they’ve had in the past. But higher income folks would receive a little less.
As Heritage expert Alison Fraser explains, Social Security is already income-adjusted today. This is called means testing. Benefits are capped for high-income earners, and the calculation of initial benefits a new retiree receives is based on his or her past income. Upper-income retirees pay a much higher tax than those with lower incomes. Romney proposes to extend this income adjusting so that upper-income retirees receive a bit less than they do now.
While many politicians claim that the only way to address entitlements is to raise taxes or cut benefits, expanding means testing is a serious and sound way to pursue reform.
These kinds of solutions can be found in Saving the American Dream, Heritage’s blueprint for solving our spending and debt crises. Saving the American Dream lays out solutions like slowly moving to a flat Social Security benefit that keeps seniors out of poverty, means testing Social Security so that very affluent seniors have a reduced benefit, and moving to a more robust means-tested premium support mechanism for Medicare that offers seniors choice and control over their health dollars and better health outcomes.
Without reforms, entitlement programs will push spending to untenable levels and put undue pressure on vital areas of government such as national defense. The Obama Administration’s comments about reform, like “now is not the time” for fixing Social Security and the need for a “balanced approach,” have been proven hollow by its push for tax hikes on job creators. We have a spending problem, not a revenue problem, and the longer Washington wastes time, the harsher the changes will have to be.
This debate is vital. To save the American economy and sustain the safety net for those who need it, spending must be reined in and entitlement programs must be reformed.