What Would Happen to Young People If We Cut Their Parents’ and Grandparents’ Government Benefits? The Third in a Series of Columns Analyzing What Mitt Romney Would Do As President
It seems that a day cannot pass without a Republican politician invoking the interests of “our children and grandchildren” as a reason to oppose President Obama’s economic policies. The familiar and creaky line is that we (the feckless and selfish Baby Boomers) are piling up debt, and thus heedlessly burdening future generations with bills that will have to be paid after our “party” is over.
There are many holes in such claims, most of which I have discussed many times before (for example, in a column here on Justia’s Verdict earlier this year). Thus, although the topic is not the focus of today’s column, it is important to remind readers up front that the federal government supports important public investments—investments that are necessary to rebuild and expand the nation’s infrastructure, to support its public schools and universities, and to allow its most vulnerable citizens to escape the ravages of poverty and become full participants in our society and economy.
Even if we borrow money to finance those investments, the payoffs from those investments will endow future generations with the greater means that are necessary to service the national debt that they will also inherit. Living standards are higher today than they were one or two centuries ago, notwithstanding higher levels of national debt, because of our previous public investments in nearly-universal public schooling, the interstate highway system, the Internet, a world-class system of higher education, and so on. Accordingly, any responsible country would—like any well-run business—continue to look for ways to borrow money that are likely to improve its long-term prospects.
President Obama has hardly been a full-throated advocate of such policies, but at least he has tried to support public investment, rather than undermining it. By contrast, Mitt Romney, and especially his running mate, Paul Ryan, have been unapologetic advocates of policies that would reverse the economic progress that has made this country a great power.
As I discussed in the first two columns in this series earlier this year (available here and here), life under a President Romney (with the real power being vested in Mr. Ryan and the people who have backed his inexplicable rise to prominence) would see a disastrous change in the policies that have been responsible for America’s economic greatness. The country would be worse off both immediately, and in the long run.
In today’s column, however, I want to focus on a different (though directly related) question. What about that “pile of IOU’s” that supposedly is burdening future generations? Is it not possible that, as many have claimed, the federal debt could become so large that it will indeed make today’s younger generations and their future offspring worse off? And if so, should we not support efforts to reduce spending on Medicare and Medicaid, as both men on the Republican ticket have advocated at various times?
The short answer is that such cuts would not only be disastrous for the elderly, but they would also harm their children and grandchildren, too. The reason is simple: When we hurt one generation, the harm is not confined to that generation. In both obvious and subtle ways, attempts to save money up front on care for older Americans will only come back to haunt younger Americans—sooner, as well as later.
Are the Republicans Really in Favor of Cutting Programs for the Elderly? Although They Now Deny It and Obfuscate Their Positions, Their Ideological Commitments Require Such Cuts
Before going further, I should note that the current word from the Romney campaign is that they would not, in fact, cut spending on Medicare. Even though Mr. Ryan infamously advocated just such cuts, what I have called the “double Etch-a-Sketch” strategy of the Romney campaign now involves denying that they support any of the unpopular policies that either Romney or Ryan has supported in the past.
The reality, however, is that the very essence of the Republicans’ strategy requires cuts in spending on programs that help the elderly—not only Medicare, but Medicaid and Social Security as well. Because they refuse even to consider raising taxes—and they are especially opposed to increasing taxes on the wealthiest Americans—the Romney/Ryan ticket must ultimately favor cuts in spending on the elderly. There simply is not enough money in any other area of the federal budget to generate the level of savings that the Republicans claim is necessary—except the budget for the Pentagon, which Mr. Romney has pledged to increase.
If we are going to stop “burdening our children and grandchildren with debt,” therefore, the savings have to come from the only other large spending programs. That means that the Republicans’ policies would require serious cuts in Medicare, Medicaid, and Social Security.
Despite their attempts to erase their past positions, moreover, Romney and Ryan are clearly on the record as favoring cuts in Medicare and Medicaid. Mr. Ryan’s proposal to “save” Medicare, which is now often called “VoucherCare,” would turn the current single-payer health insurance program into a program of shrinking subsidies for the elderly. Those subsidies would be used to buy private health insurance policies, which would become increasingly inadequate over time (due to the very same mechanisms that allow Mr. Ryan to claim that his plan would save money in the long run).
The result, for seniors, would be that they would directly bear an ever-larger share of the costs of their health care. This is, again, by design on the Republicans’ part. The Ryan proposal is premised on the idea that older people should face the tough choices that will force them to economize on health care. Amazingly, this duo actually embraces, with its policies, the specter of the elderly choosing between food and medicine.
Similarly, the Ryan budget plan (a version of which Republicans enthusiastically passed in the House of Representatives earlier this year) would turn Medicaid into a “block grant,” which means that the federal government would send each state a fixed sum of money each year to pay for its Medicaid expenses—no matter how many people in the state actually need care. And again, this sum would shrink over time, as a share of the economy.
Readers may wonder, however, whether Medicaid is relevant to this discussion, given that it is a program designed to subsidize medical care for poor people, not older people. In fact, Medicaid is overwhelmingly important for older people, who are far too often forced to impoverish themselves in order to receive care under Medicaid’s restrictions. Cuts to Medicaid are not, therefore, going to affect only younger poor people. They will, in addition, directly harm formerly middle-class older people.
If the Republicans do not wish to admit that they will cut spending on Medicare and Medicaid, then their only alternative is to admit that they will cut spending on Social Security. Although they do not currently wish to confess to that strategy, the simple arithmetic tells us that their policies will—in the name of helping younger people—truly harm older people.
Who Takes the Hit From Spending Cuts? Attempts to Take Money Away From Older People Will Actually Harm Younger People, Too
The argument that Republicans are making, stripped to its essence, is thus that we have to take money from older people and give it to younger people. There is a reason why we have not heard this argument in mainstream American politics before: it is suicidal to make it. It should be no surprise, therefore, that that the argument comes cloaked in evasions and outright lies. During an election, because of the high turnout of older voters, the Republicans must deny this fundamental implication of their program. In reality, however, their admonitions against increasing the national debt amount to nothing more or less than transferring money from the old to the young.
Should such an agenda please young people? Certainly, there is plenty of purportedly sober talk about the supposed greed and self-centeredness of the Baby Boomers. There are surely younger people, therefore, who would not mind seeing older people lose out on some of their “goodies” (if, indeed, hip replacement surgery can be counted as a “treat”), in the name of reducing taxes in the future.
As only a few commentators have noted, however, taking things away from older people is not without consequences for the young. One extremely unpleasant vision of a post-Romney society would have growing numbers of older people living in poverty, and dying of preventable diseases. The specter of an army of homeless elders is enough to remind many people that cutting benefits for older people does not make them disappear. Indeed, many of the least fortunate would become literally more visible than ever, living on the streets and clogging emergency rooms.
There is, however, a much more direct way in which younger people would feel the effects of spending cuts that would supposedly affect only their parents and grandparents. When older generations of a family have less money, less money flows to younger generations. And when older generations have no money at all, money flows from younger generations to their parents and grandparents. And sometimes, the support that younger people must give their parents comes not in the form of money, but direct care.
An economist friend once commented to me that the best way to convince younger voters to save Social Security and Medicare would be to ask each family with school-aged children and aging parents where they would put their parents, if the parents showed up on their doorstep, needing a place to live. Paying taxes to support benefits for parents and grandparents, after all, starts to look pretty good, if the alternative is turning the recreation room into a permanent guest room for Grandma and Grandpa.
What is at stake for working-aged families, therefore, is the question of how they wish to have their parents and grandparents cared for—and how well. Even if we ignore childless elders, who would presumably be left to the tender mercies of underfunded charities (in the you’re-on-your-own world that the Republicans championed at their national convention last month), the consequences for families would be pronounced. Moreover, those consequences would be immediate, with parents needing places to live, and needing money for medications and doctor visits, right away.
Cutting Benefits for Elders Would Have Extremely Adverse Regional and National Economic Effects As Well
Young people, therefore, have every reason to be suspicious about claims that it is possible—much less, desirable—to take benefits away from elders in a way that does not boomerang on the young. People in their twenties and thirties, who currently are happy to visit their parents a couple of times each year, and who expect to be able to inherit and sell the fully-paid-for family house when the parents die, should think carefully about what it means to “stick it to the Boomers.” The day-to-day reality of life is quite different when one’s parents are in the next room, rather than a plane ride away.
Beyond those direct personal effects, moreover, cuts to seniors’ benefits would have profound impacts on the economy, both regionally and nationally. It is ironic that so many supporters of the Romney/Ryan approach reside in Sun Belt states, especially Florida and Arizona, where the local economies depend so completely on the spending that retirees pump into those economies (through their federal Social Security and Medicare dollars). If elders cannot afford even to live in their own homes, much less to live in retirement homes for half the year, then property values and general economic activity in traditional retirement areas are sure to fall precipitously. Add to that the money for geriatric-centered hospitals and other medical facilities that are currently located in those states, and we can see that cuts of the size required by the Republicans’ plans would lead to severe regional economic declines.
More broadly, the national economy would, based on Romney and Ryan’s plans, undergo a long period of adjustment in response to lower levels of elder spending. Even if (against all evidence and logic) the long-run result were as rosy as advertised by the proponents of cuts in spending on older Americans, the years-long transition period would include severe disruptions—again, not just for the elders who would face very different retirements than they had planned, but for all of the younger people whose job skills would no longer be needed, and who would need to move to different parts of the country to find jobs.
There is no doubt that long-term spending on health care—all health care, not just Medicare and Medicaid—must be brought under control over the next few decades. There are, fortunately, ways to do that that do not inflict the kinds of damage that the Romney/Ryan approach would entail.
By contrast, life under the Republicans’ vision would be bad both for the senior citizens that it directly targets for harmful cuts, and for their children and grandchildren. Those young people would be left struggling—without the help of the government, which can spread costs and reduce both individual and social burdens—to give their elders a decent and dignified retirement. That is not a future in which anyone, the old or the currently young, should want to live.