Thursday, November 04, 2004

Bush's to-do list for the next four years: #1 domestically. And #2, #3 ...

There's one and only one serious domestic policy problem facing the U.S. in the readily foreseeable future -- the U.S. government's $53 trillion (or perhaps much more) current value unfunded obligation for promised entitlement benefits that start coming seriously due in about a decade, as previously noted (in a story with a nifty interactive graphics and calculator), and noted again by the US Comptroller General in the news today.

How serious can this be, being that no candidate of either party for office at any level even mentioned it during the just completed election season?

As one readily-at-hand illustration, this GAO Report (.pdf) projecting future government finances is forced to end projections around 2045 -- the end of government! -- when just the interest on the national debt exceeds 20% of GDP, more than the entire size of the federal government today, and is rocketing straight upward through compounding. Beyond that, GAO says, projections are implausible.

Excluding that interest, the portion of GDP just going to Social Security, Medicare and Medicaid is projected to then be larger than the entire federal government today.

And those are Year 2000 projections which assumed the economic boom would continue through today with no recession, no Bush tax cuts, and surpluses still running and being saved today -- instead of our $400 billion deficits.

So if Dubya really wants to leave a domestic legacy that will be remembered (positively), then getting the nation to take its first real steps to close this gap, and committing it to do more on a steady basis after he is gone -- starting to turn the supertanker of entitlement politics and policy, if you will -- is the place where he will do it, or not.

Clinton had a sterling chance to make a legacy for himself here. The bipartisan Breaux Commission was formally established to make recommendations for Medicare -- which accounts for the lion's share of the $53 trillion -- while senior Democratic Senators like Breaux, Bob Kerrey and Daniel Patrick Moynihan were willing to work with the Republicans on advancing reform of Social Security.

But Clinton did not. When he got himself into that little spot of bother he solidified support from his political left by chucking entitlement reform overboard -- then deep-sixed it entirely before the 2000 election to be able to use the old Democrat populist Social Security and Medicare rhetoric to help get Al Gore elected against those nasty benefit-cutting Republicans, for all the good that did. So much for his chance at a legacy.

Now Bush and the Republicans will or will not, and we shall see who they really are, and if they are any better. With Dubya not having his own re-election to worry about his legacy should move up to his first concern. And with the Repubs upping their strength to 55 in the Senate and holding an iron (even better, gerrymandered!) lock on the House, they have no excuse not to set the required agenda.

Though they need not. If nothing is done voters won't feel the pain for another decade or so, until Social Security goes cash-flow negative. So the Repubs can still pass as a matter of convenience rather than bite a bullet, or even a bee-bee. The coming crunch was seen coming long ago and nobody has done anything about it yet -- except to make it worse, by creating ever more unfunded benefits, including very notably Dubya's own prescription drug benefit. So it is certainly plausible that the Republicans will push the problem back onto somebody else's watch and pursue other issues to marginally increase their vote counts as they prepare for 2006 and 2008.

But let there be no doubt, this should be domestic policy issue #1... and #2, #3, #4 ... probably down to about #7 or #8. No other domestic issue has anything like the foreseeable consequences.

There is nothing else that conceivably threatens the U.S. government, and hasn't been since all those Soviet nuclear missiles were de-targeted from the U.S. (They have been, right?) So priorities should be clear.

This doesn't mean the Republicans have to commit political hari-kari by trying to reshape these programs dramatically and quickly, while Democrats run campaign ads showing Dubya pushing old people in wheelchairs over cliffs as they did in 2002.

Restructuring these programs will doubtless take decades, as it took decades to build them up into their current form. The start may involve educating the public about the realities of the situation more than anything else.

But time matters, compound interest matters a great deal. So the time to start is now.

The Republicans now will or they won't. We shall see.

More on this later.