'Entitlement Reform' Is a Trite Non Sequitur That Won't Shrink Government
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Let’s get the obvious out of the way: Social Security and Medicare were and are impressively foolish ideas. That Americans desire comfortable retirement that includes healthcare is all the evidence we need that the federal government as provider of both was superfluous. If there’s a market for something, market-disciplined private sector players will offer it. 

To then pretend that the federal government filled a market void with the rollout of Social Security and Medicare amounts to willful blindness. And for those who say government can provide what we all want at a price point that meets the needs of those with the least, please stop right there. The private sector has made once impossible-to-attain automobiles, air conditioners, air travel, and smartphones available to everyone, while the federal government has spent trillions on retirement and medical plans that, as evidenced by how many of us seek retirement and medical services outside of Social Security and Medicare, can’t come anywhere close to fulfilling their mandates.  

Having said all that, the popular notion of “entitlement reform” that has been endlessly bruited by the “responsible” and “prudent” in our midst for decades might be as dumb as the programs these self-regarding policy “wonks” aim to shrink. Actually dumber. Please read on.

By “reform,” the self-serious claim we must shrink the cost of programs that are “unsustainable,” and that we “can’t afford.” And since we “can’t afford” them, we face Armageddon if we don’t reduce their costs. Every reader reading this knows these smug types, and it’s possible some reading this are the smug promoters of doom absent an “adult conservation” about reform that will be followed by the real thing. The promoters of entitlement reform could fill many, many Rose Bowls.

Of course, the crowd calling for “necessary” conversations about what must be done completely misses the point. If we’re being realistic, that which would reduce the future cost of these revoltingly dense programs wouldn’t shrink the cost of government, though it will likely expand it.

Too see why, it’s important that reason enter a conversation that’s been informed by sanctimonious scolding for decades. To begin, evidence supporting the obvious truth that the entitlement programs are actually very “sustainable” is the existence of the programs themselves. Markets are a look into the future, and the fact that the U.S. Treasury can borrow more cheaply than any other entity (private or public) in the world is all the evidence we need that what’s foolish and incredibly expensive is also “sustainable.”  

Assuming a “responsible” reduction of their costs, such a view presumes that having saved hundreds of billions, trillions, or tens of trillions, Congress will wisely celebrate its reforms and go home. How very naive. Politicians exist to spend money. To then pretend that reform will shrink government is to be blind to the nature of those who populate the world’s second oldest profession.

Money saved through “reform” won’t be stashed away at Fort Knox, or returned to us, rather the gusher of available money born of reform will provide politicians with billions and trillions to create all manner of new programs, bureaucracies, and other burdens that will be underwritten by the productive. Government will not shrink thanks to reform as much as the reform will enable all new ways for politicians to grow government.

Figure that Medicare didn’t just happen as much as a surge of revenues in the 1960s provided politicians with the means to start a program that initially cost several million, but that is projected to cost over a trillion annually very soon. This is an inconvenient truth missed by starved-for-revenue Democrats and happy-talking Republicans eager to gift their friends across the aisle funds to waste through “revenue-maximizing” tax cuts. The Dems who think we don't take in enough tax revenue are hopeless, while the happy talkers shamefully insult tax cuts. The goal of tax cuts should be to reduce revenues. Always.

Whatever one’s ideology, hopefully what made Medicare possible wakes readers up to the simple truth that we don’t have an entitlements problem; rather we have a too-much-revenue problem that enables incredibly foolhardy programs dreamed up by politicians. The self-serious budget scolds claim that a failure to reform entitlements will result in interest payments as the biggest line item in future budgets, only for these scolds to oddly claim that this would be a bad outcome.

More realistically, it’s the actual cost of existing entitlements and the interest paid to finance these entitlements that at least somewhat limits the ability of politicians to invent all new ways to burden us. Thank goodness for the existence of surely mindless programs that limit the creation of other insults to reason.

Despite this, proponents of reform at least rhetorically have been searching for decades for the very "savings" that will free politicians to divine all new ways to waste money. Handing politicians money is unwise, which means abiding the self-satisfied misery of the “entitlement reform” crowd is extraordinarily unwise.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

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