Some absolutely essential plain speaking about entitlements

Dr. Jane Orient at Caffeinated Thoughts nails it:

The Washington Post of October 18 says that the biggest issues in the midterm elections are the threat that Republicans will slash Medicare and Social Security, and maybe get around to repealing ObamaCare after all. It quotes a tweet from Sen. Tammy Baldwin (D-Wis.) that Republican statements about “adjusting” entitlements are “Washington-speak for cutting the Medicare and Social Security benefits you have worked hard to earn and making you pay for tax breaks to millionaires and billionaires.”

So, will rescinding the tax cuts and taxing the “rich” even more fix the problems?

Think about it for just a minute. Didn’t seniors already earn their benefits? If so, why the need to tax the rich to pay them?

The ugly truth is that the payroll taxes paid by today’s retirees were taxes, not contributions to a protected pension program. That money was spent immediately on yesteryear’s retirees—and any excess on reducing the deficit. The money in the “trust funds” is only a claim on future tax revenues.

There is no longer any excess. Payroll taxes from fewer than three working Americans are supposed to support one retiree, and the trust funds are being drained. Retirees’ and Medicare providers’ checks are coming from the wages of burger flippers, teachers, construction workers, or anybody else who is employed. Even if you think this is fair, it is a precarious and unsustainable situation. As the Baby Boomers retire, workforce participation by men of prime working age is shrinking, and wages have been stagnant.

The rich are not sitting in their counting houses counting out their money. The money is mostly invested in enterprises that create jobs (and payroll tax revenue) and produce the goods and services we all need. Even if a draconian increase in taxes produced an increase in revenue—and it usually doesn’t—it would likely crash the economy.

The situation for all of us, not just seniors, is deadly serious, and it requires economic realism, not name-calling, bickering, platitudes, and magical thinking. 

There is no disputing this. At some point, post-America must engage in a very grown-up conversation about it.