October 24, 2014

Washington’s Unaffordable Promises

  • Social Security, established in 1935, is the federal government’s largest program. It represents approximately one-fifth of the federal budget and...

“Our government shouldn’t make promises we cannot keep,” President Obama said in his State of the Union Address, “but we must keep the promises we’ve already made.”

While that was a good applause line, Concord Coalition Executive Director Robert L. Bixby says,  it glossed over a key point: “The promises we’ve already made are the ones we cannot keep.”

Washington has been making large unfunded promises for years, leaving us with an unsustainable fiscal policy. “Yet, if we decide that all promises must be kept,” Bixby writes in a new blog post, “we can’t change anything without ‘breaking a promise.’”

A bipartisan group of former members of Congress warned after their Strengthening of America forum series last fall that we cannot put our debt on a sustainable path without reductions in the projected cost of entitlement programs, cuts in discretionary spending and higher federal revenues.

“Strictly speaking,” Bixby points out, “any of those things could be characterized as breaking a promise.” He also notes that the biggest promises are in the two major social insurance programs: Social Security and Medicare.

Even with much of the Baby Boom generation still in the work force, the Social Security and Medicare Part A payroll taxes do not cover the cost of the benefits that are currently being paid. Medicare Parts B and D premiums are set to cover just 25 percent of the cost of benefits, with the rest paid out of general government revenues.

Absent reform, the resulting pressure on the federal budget will simply worsen as more people retire and health care costs rise faster than the rest of the economy.

“President Obama was right to acknowledge that the government shouldn’t make promises it cannot keep,” Bixby says. “If he wants this to be a reality, however, it is crucial to also acknowledge that reform of our existing programs is not the same thing as breaking a promise. But if we do want to think in terms of promises, why not promise an overall fiscal policy that is sustainable? “