Pledging Our Way to Fiscal Disaster

By :: October 19th, 2010

Three-quarters of Americans believe that entitlement programs such as Medicare and Social Security “will create major economic problems” over the next 25 years. But two-thirds are opposed to addressing these challenges by reducing benefits, and 56 percent are against raising taxes.
And congressional candidates, who read the polls, are scrambling to pander to the free-lunch beliefs of their respective bases. As a result, they are locking themselves into opposing both reductions in future benefits and tax increases.
Houston, we have a problem.
The poll results are from a new USA Today/Gallup survey, but they track other recent research. Even after decades of Inside-the-Beltway entitlement talk, very little has registered with real people. Denial, as they say, ain't just a river in Egypt. And the result is an exceedingly dangerous political climate in which the nation must try to address its long-term fiscal problems.
The Gallup poll shows the usual partisan divide over both the definition of the problem and potential solutions. Eighty-six percent of Republicans surveyed believe entitlements will cause big trouble, but only 69 percent of Democrats agree. And entirely predictably, more Republicans (41 percent) want to cut benefits than do Democrats (22 percent) or independents (32 percent). By contrast, tax increases are backed by 60 percent of Democrats but only half as many Republicans and 40 percent of independents.
The only good news in this poll is that 62 percent of respondents do want to do something about the entitlement problem. The very bad news is that an overwhelming 88 percent oppose the solution backed by nearly all policy wonks, which is to mix tax hikes with benefit reductions.
This means there will be no solution to the nation’s long-run fiscal problems unless politicians are brave enough to buck these public perceptions. Yet, at least in high election season, pols are being anything but.
Republicans, as they have for years, are increasingly locking themselves into opposition to any tax hikes in any circumstances. Americans for Tax Reform claims that 205 House candidates and 36 Senate candidates, and 174 sitting House members and 34 sitting senators (there is obviously some overlap here) have signed its anti-tax pledge—no tax rate hikes under any circumstances, and no reduction in deductions or credits without offsetting cuts in rates.
Now Democrats have a pledge of their own. A liberal group called the Progressive Change Campaign Committee claims that 237 Democrats, including 11 Senate candidates, 81 House candidates, 12 sitting senators, and 133 incumbent House members have signed its vow to “oppose any cuts to Social Security.”
We’ll see how many of these candidates win, but it is entirely possible that close to a majority of House members have already vowed to neither raise taxes nor reduce promised Social Security benefits—three months before a new Congress is even sworn in.
Okay, we won't touch Social Security and won't raise taxes. What about Medicare? You guessed it. There's another pledge. Republicans, in an effort to attract seniors, are trying to position themselves as protectors of Medicare against those dastardly Democrats who want to constrain the future growth of that program. So the House Republicans Pledge to America blasts the “massive Medicare cuts” in the new health law and vows to repeal them, along with the rest of the measure. All while balancing the budget, of course.
Over the next couple of months, we are going to see at least two bipartisan commissions attempt to thread the needle on deficit reduction. Between polls and pledges, they’ve got quite a chore ahead of them.


  1. Anonymous  ::  8:08 pm on October 19th, 2010:

    Contrary to your assertion, the Democrats are brave. They defied public opinion to enact a major new benefit pledge. This will cost them at the polls, but they still believe that expanding government's role in health care was worth the price.
    I wish the Democrats had used their bravery to close the fiscal gap rather than widen it. Instead they used some of the best fiscal ammunition (mostly new taxes on higher incomes) to pay for a new program rather than for existing promises. Now the gap will have to be closed by tax increases and spending cuts that primarily affect the middle class. Democrats' bravery has put us deeper in the hole.
    Bravery is bad when it is misdirected.

  2. Anonymous  ::  8:56 pm on October 19th, 2010:

    The Democratic approach to taxing high income earners more for Medicare is simply a precursor to move taxation to support this program from a payroll tax to a VAT (which if it replaces other taxes raises net incomes) or an expanded business income tax (which instead cuts gross, but not net income) – doing both for different reasons will raise net incomes to deal with the VAT while lowering gross incomes to deal with business income tax expansion to all businesses and all value added (including wages).
    Of course, I am sure there is a no VAT pledge around here someplace.
    The gridlock owes much to Grover Norquists well funded efforts. It is interesting that he did not get caught up in the Abramoff affair – he seems to be Teflon. When his star falls, and all stars do, pledges to his organization would be forgotten.
    Can the Republican Party survive the onslaught of what is essentially a rebirth of the John Birch Society or will moderates flee to a new majority party. It all depends on who comes out to vote in two weeks. If the Tea Partiers don't do really well, their influence will be minimal.

  3. Anonymous  ::  9:08 pm on October 19th, 2010:

    Social Security is a problem way down the road – so it should not be touched. Military spending will likely be touched heavily – although that may wait until 2013 – along with tax reform. This may be an electoral question rather than the question for yet another commission to solve. If the Republican nominees is pure fringe, there may be an opening for a moderate with a solution.
    Medicare and Medicaid is the big kettle of fish – and the only way to fix them is as part of a larger reform of health care reform – which is inevitable once it is clear that the Patient Protection Act's mandates are too weak to prevent policy holders from dropping their insurance until they are sick and can be insured under pre-existing condition reforms. Of course, most of such traffic happens at the margins – the real question is can business bargain down increases to large employers. If not, there will be agitation for single-payer.
    If enough people begin to rely on pre-existing condition reform to avoid buying insurance, Wall Street will treat the industry badly and it will fail – leading to single-payer. When that happens, Medicare and Medicaid reforms will happen as well. Notice I did not say “if” but when. I suspect most health care analysts will agree with this scenario privately – which is why NO ONE will expend any political capital to solve Medicare and Medicaid before the current health care finance system collapses.
    Such a collapse is much more likely in the short term than a collapse in public debt finance – assuming that the Debt Ceiling is allowed to increase. If Republicans think that they won't be held responsible for default, they are as sadly mistaken as Gingrich was about their reaction to shutting down the government in 1995-96.

  4. Anonymous  ::  9:15 pm on October 19th, 2010:

    It is intriguing that with increasing criticism from Washington about state and local entitlement practices as the silver tsunami begins to strike, more state and local governments have enacted significant modifications to their retirement plans in 2010 than in any other year in recent history. Since 2006, nearly two-thirds of the states have made changes to benefit levels, contribution rate structures, or both and many more local governments have made adjustments. Watching the riots in Greece and the bags of tea, one has to respect how very difficult these changes are to make. The tragedy is that it seems a higher priority in Washington to criticize others rather than honestly confront its own problem.

  5. Anonymous  ::  11:03 pm on October 19th, 2010:

    >Medicare and Medicaid is the big kettle of fish – and the only way to fix them is as part of a larger reform of health care reform – which is inevitable once it is clear that the Patient Protection Act's mandates are too weak to prevent policy holders from dropping their insurance until they are sick and can be insured under pre-existing condition reforms. Of course, most of such traffic happens at the margins – the real question is can business bargain down increases to large employers. If not, there will be agitation for single-payer.
    I'm surprised that you don't realize that Obama's idea was to pass any “reform” bill that would cause the current insurance system to fail. Only when health care insurance is truly and completely broken will the voting public accept national health care, which its advocates call single payer or Medicare for all.
    That is what progressives have wanted for many decades. Obamacare's defects are actually features which improve its ability to achieve this objective. I saw this coming a mile away and told people about it during the year-long debate. You know, while Obama was totally focused on fixing the economy.
    By the way, I find it amusing that Obama's supporters choose not to attach his name to the signature achievement for which he worked so hard. It's almost as if they believe he should be ashamed of it.

  6. Anonymous  ::  8:41 pm on October 20th, 2010:

    From Center for Fiscal Responsibility
    “In Search of Fiscal Responsibility:
    Ten Questions to Ask the Candidates”
    1. Picking a Fiscal Goal. Do you believe the country has a serious fiscal problem? If so, do you think the country needs a “fiscal goal?” What particular fiscal goal would you support?
    2. Going Beyond the Budget Myths. Eliminating waste, fraud, abuse, earmarks, and tax evasion will not solve our fiscal problem. What other specific cuts are you willing to accept?
    3. Paying As You Go. If you support new spending programs or tax cuts, will you offset the costs so they don't add to the deficit?
    4. Extending the Tax Cuts. Do you support extending some or all of the tax cuts?
    5. Strengthening Social Security. Do you believe that Social Security is in financial trouble? If so, what should be done to strengthen it? \
    6. Finding Savings in Defense. Do you think we should pay for any additional war costs by cutting other programs or raising taxes, instead of continuing to borrow to fund them? Do you believe that defense cuts should be one way to decrease the federal debt?
    7. Controlling Health Care Costs. Will more have to be done to control federal health care costs? If so, what/
    8. Raising Taxes. Will we need to raise taxes to gain control of the federal debt? If not, and you think it can be done all through spending cuts, which ones?
    9. Rejecting Pledges. Rather than saying what you would not do, will you focus on what you would do to fix the problem?.
    10. Considering Proposals from the Fiscal Commission. When the White House Fiscal Commission makes its recommendations, will you consider the proposals and suggest alternatives for those you do not support?

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