Sunday, January 25, 2009

A Conservative Viewpoint
- Will We Embrace
Entitlement Reforms?

Article by Bob Steinburg
- Edenton, North Carolina: Cradle of the Colony

Walgreens ran an entertaining series of television commercials last year centered on the idealistic, utopian, town of “Perfect.” Whatever anyone desired could be found there. The fantasy abruptly ends with the words, “But life isn’t always perfect; that’s why there’s Walgreens.”

Clearly, the town of “Perfect” doesn’t exist, at least not in this world. Individually, we must continually confront challenges that test our resolves. These challenges are increasing as a result of the financial crisis that stretches from Wall Street to Main Street. Basics like putting food on the table, staying warm, stretching money to pay bills and obtaining basic healthcare and trying to find or keep a job are increasingly more difficult. This may not be the Great Depression of the 1930s, but don’t tell that to someone who is hungry or out of work. It’s a recession when it affects our neighbors-a depression when it affects us.

In his inaugural address, President Barack Obama told the nation that we need to return to the country’s roots by focusing on hard work and accountability. “Our capacity remains diminished, but our time of standing pat, of protecting narrow interests and putting off unpleasant decisions-that time has passed,” he said. His rhetoric is point-on. The difficulty will come when those “unpleasant decisions” must be made.

When trying to find one’s way out of a financial dilemma, personal or business, the tendency is to start eliminating those little expenditures that no longer seem necessary. While this certainly helps to reduce debt and increase cash flow, it seldom is enough.

In another life, I advised business clients not to delude themselves into thinking that simply making minor adjustments in expenditures would turn their balance sheets from red to black in an economic downturn. Needed was an honest evaluation of their biggest business expenses. It might be payroll, inventory or benefits. Even the personal perks like that new car every couple of years, healthy bonuses and country club memberships needed to be assessed. Only then could they begin to fix the problem. Denial wouldn’t do it.

The government’s biggest expenditures are entitlements. Last April, Rep. Randy Forbes, (R-VA), pegged automatic government spending on current entitlements at 62 percent of the nation’s budget and increasing. The Congressional Budget Office reported that Social Security and Medicare, the two largest entitlement programs, account for 33 percent. If any meaningful fiscal reforms are to be made, they must start here.

It won’t be easy. Many incumbent politicians have used entitlement reform against an opponent who suggests reform is necessary; by scaring voters into thinking those changes might put at risk their current or future benefits. But with the deficits continuing to spiral out of control, Obama is seeking to get Congress to do the unthinkable: rein in entitlements.

Reforming Social Security was a top priority of President Bush. He recommended making changes to that venerable program that would have given participants an opportunity to invest a small portion of their Social Security taxes into low risk bonds and securities. Participation was to be optional. Bush was taking a “long- term” look at increasing the rate of return for those with many years to go until retirement.

Whether Congress viewed Bush’s plan as breaking a sacred trust between the government and the folks is hard to say. His plan was scrapped. Congress once again showed reluctance to deal with Social Security’s pending insolvency.

Obama will be holding a Fiscal Responsibility Summit next month. Certain to be discussed are possible adjustments in the Social Security tax rates and benefit tables. Lifting the salary cap on the FICA tax is one option under consideration. Depending on how Congress views the electorate’s acceptance of any reduction in benefits will go a long way in determining whether there will be reforms.

Medicare, in the short- term, is the more at risk entitlement and needs immediate restructuring. Obama is emphasizing preventive health care for the long haul while finding cost savings in the here- and- now. Government estimates show that one third of Medicare’s costs are for administering the program. Obama feels there is money to be saved here. In addition he estimates that billions of dollars could also be saved by allowing the government to negotiate pricing with drug companies, while reducing the amounts currently being paid to Health Maintenance Organizations for services.

When it comes to entitlements, Americans have opposed change that calls for sacrifice. Clearly change is needed. But can Obama’s rhetoric convince enough people to ingest the unsavory medicine he says is needed to stabilize our entitlement programs? We’ll soon have the answer. But one thing is almost certain; if we don’t swallow it, Congress won’t either.

At least one concern I have that Bob does not seem to recognize is Barack Obama does not expect any beneficiaries of entitlements to actually share in the pain. Simply talking about sacrifice means nothing. I have to caution my conservative friends again and again to remember, Obama is a Saul Alinsky devotee. That means he has completely embraced the philosophy that you never show your real intentions to anyone. Everything is a feint to confuse others so you can get through the back door what you never allow anyone to know is your real agenda. Even with liberals, Obama is cautious to rarely say exactly what he wants.

That frightens me. It should frighten anyone. It should also mean you must look for the hidden agenda in everything Obama does or says. He is more duplicitous than most can comprehend. I think his real agenda is to move funding of these programs to productive businesses and productive members of society. Those are the real threats to freedom in the socialist vision of the world. Obama is totally committed to that type of thinking.


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