Big obligations

Next president must reform entitlements

The next U.S. president must address the nation’s ballooning entitlement programs.

They’re impossible to ignore. Social Security, Medicare and Medicaid already consume about half the federal budget. Roll in interest on the national debt and other so-called “mandatory” federal programs, and more than two-thirds of the federal budget is accounted for — about $2.5 trillion per year. And that price tag is going nowhere but up in the years and decades ahead.

Presidential candidates are frequent visitors to Nevada as they try to build support for February’s first-in-the-West caucuses. Republican candidates will be in Las Vegas next week for Tuesday’s nationally televised debate at The Venetian. Because of Nevada’s important role in the presidential nominating process, the Review-Journal is publishing a 10-editorial series of policy goals for presidential candidates. The newspaper’s 10th and final recommendation to the field: entitlement reform.

Every presidential candidate wants some new spending as part of their agendas, with Republicans generally favoring a bigger Pentagon budget and Democrats calling for new domestic initiatives. They’ll have a hard time finding new money for their wish lists. Military spending already consumes about half of all federal discretionary spending. The slice of the budget pie dedicated to all other federal functions and national priorities — transportation, law enforcement, foreign aid, you name it — amounts to a little more than 10 percent because of the rising obligations of entitlement programs.

Now for the really scary part of Washington’s budget math: According to the Congressional Budget Office and Office of Management and Budget, all federal tax revenue will be consumed by Social Security, debt interest, Medicare, Medicaid and other health care programs by 2033. If that sounds far-off, consider that children born next year and beyond will not yet have their high school diplomas when the government’s fiscal judgment day arrives. The next president cannot kick this can to his or her successor.

The demographic challenges faced by Social Security and Medicare are exceedingly difficult to address. The baby boomer generation is retiring in droves, reducing the country’s worker-to-beneficiary ratio. Meanwhile, as life expectancies have increased, the eligibility age for Social Security and Medicare hasn’t kept pace. As a result, the programs have about $60 trillion in unfunded liabilities— promised benefits they have no way of paying for.

Simply borrowing more and more money every year to pay for those promised benefits isn’t an option because the national debt is approaching $19 trillion, and interest payments on that debt will consume more of the federal budget once rates start to rise.

Candidates must commit to a steady increase in the retirement age for Americans under the age of 50. The longer Washington waits to reform the programs, the greater the likelihood that current beneficiaries will face cuts. —The views expressed above are those of the Las Vegas ReviewJournal. All other opinions on the Opinion and Commentary pages are those of the individual artist or author indicated.