Six years ago, Peter Orszag, Obama’s Budget Director co-authored a Brookings Institute study that concluded: “Balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending.” It’s getting worse: Today entitlements eat up 40% of the federal budget and are growing. No doubt Orszag’s earlier thinking had a lot to do with why Obama picked him. But it’s also a signal of what we can expect when a Social Security reform bill is sent to Congress during Obama’s “first hundred days.” And that will trigger a brutal battle. Why? Because AARP’s 35 million members will fight all benefits reductions. While young voters who put Obama in office will fight any new Social Security taxes.
Bruising battle? But it won’t matter. In the long term, reforming entitlements will be like rearranging deck chairs on the Titanic. Remember, Obama’s adding a $1 trillion stimulus package on top of what Nobel Economist Joseph Stiglitz calls a “$10 Trillion Hangover” of debt left by Bush and the economic meltdown. And all that’s on top of the massive $60-75 trillion of unfunded Social Security and Medicare liabilities. To get perspective, let’s shift our thinking into a parallel universe: Into Chris Buckley’s satirical novel Boomsday which goes way beyond acceptable government policies. He offers a bizarre solution to reforming Social Security, a solution that forces all of us to focus, not just on the out-of-control economics of retirement entitlements. He forces us to focus on the one core problem overshadowing all other global economic issues.
Too many boomers & babies, not enough resources in global equation
Population growth. Yes, population is the core problem that, unless confronted and dealt with, will render all solutions to all other problems irrelevant delaying tactics to the inevitable. Population is the one variable in an economic equation that impacts, aggravates, irritates and accelerates all other problems. Imagine you’re on a call with the Oval Office: (More)