As is well-known by now, the growth in entitlement programs fueled by rising health care costs and an aging population threatens an ever-increasing national debt. Our largest mandatory spending programs occupy nearly one-third of the federal budget and, in the coming years, payments out of these programs will continue to outpace the rate of growth in the overall economy. As such, serious entitlement reforms will have to play a role in a comprehensive approach to long-term debt reduction, along with other areas of the budget, in order to get our fiscal house in order.
However, the AARP, with substantial lobbying muscle and a new media campaign, is putting its well-heeled foot down against serious entitlement reforms from being part of the solution. Recently, AARP launched a national ad campaign arguing that savings from Medicare, Medicaid, and Social Security must be taken off the table in negotiations by the Super Committee. Among other things, in a letter to the Super Committee this week they argue against switching to chained CPI, increasing cost-sharing, allowing a 30 percent cut to Medicare payments to physicians as called for under the SGR formula, increasing the Medicare age, and reductions in the Medicaid matching rate. Nobody is calling for Congress to follow the current SGR (though it needs to be reformed) but their restrictions ultimately take about $400 billion of real savings off the table.
At the same time, AARP does suggest a couple of ways they think would be good approaches to finding savings in these programs, including prescription drug reforms and reducing waste, fraud, and abuse for a total of up to about $150 billion in potential savings. While these types of reform should absolutely be considered, we will need to go much further to control the growth in entitlement spending and public debt.
Taking ideas off of the table has been the main impediment so far to reaching a bipartisan "Grand Bargain" that will put the U.S. on a sustainable fiscal course and restore some faith among Americans that our political system can overcome significant challenges. Today, CRFB released an analysis of why a "Go Big" approach could improve the chances of the Super Committee’s success, principally by allowing for the political tradeoffs necessary for bipartisan agreement and promoting a sense of shared sacrifice. Over 155 business groups, 44 senators, and a group over 60 budget experts, former government officials, and business leaders have been calling for a big solution to debt reduction that focuses on how we can reach an agreement in the best interests of the country as a whole.
Without a strong sense of shared contributions to the solution, it will be easy to dismiss any deal. Given the size of our largest entitlement programs and the growth in their future spending projections, they also need to be central to the solution to control debt from a policy perspective. We need to recognize the importance of shared sacrifice for a better future, and we hope other organizations can begin to promote this message as well.