THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, December 20, 1994 TAG: 9412200023
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 60 lines
Annual federal deficits of $200 billion are bad, but will get far worse if responsible budgets aren't adopted. One huge stumbling block is entitlements - payments to citizens that the government has led them to believe are untouchable.
In running for president in 1992, Democrat Paul Tsongas was audacious enough to say they will have to be touched. He did not win his party's nomination, in part because voters weren't ready to hear the bad news.
But the bad news won't go away. Whatever his other faults, Ross Perot also performed a public service by teaching the same lesson with his charts and graphs. If nothing is done, by 2012 the entire federal budget will be consumed by Social Security, Medicare, veterans' benefits and federal pensions.
Now Sen. Bob Kerrey of Nebraska has reiterated the message. In exchange for a vote on the president's budget package, he demanded a serious look at the entitlement mess. Clinton put him in charge of the Bipartisan Commission on Entitlement and Tax Reform.
Kerrey and co-chair Sen. John Danforth were unable to get the other 30 members of the group to sign onto their recommendations, undoubtedly because the measures needed to fix the problem are widely regarded as political suicide. But sooner or later attention will have to be paid, and the Kerrey commission has shown a bright light on the issue.
What will it take to keep entitlements from bankrupting the country, besides political courage? Kerrey and Danforth propose raising the retirement age to 70 for both Social Security and Medicare. They call for means testing of all entitlements other than Social Security and federal pensions. They would tie cost-of-living adjustments to wage increases rather than cost-of-living measures which tend to overstate inflation.
Kerrey has borrowed from Chile the idea of partially privatizing Social Security. He'd make workers contribute 1.5 percent less of their income to the government fund, but would require them to invest it in a retirement account they would manage. This would increase national savings by $45 billion a year but would reduce the amount paid out to retirees by the Social Security system.
Other proposed reforms include a limit on corporate deductions for health insurance, a limit on deductions for top earners, an increase in the cost of Medicare Part B. These are bitter pills to swallow, an indication of how sick the patient is.
There's obviously little appetite for such medicine at a time when both parties are entering a bidding war to cut taxes and run up the deficit. But Kerrey joins a growing chorus of voices raising an alarm that includes the Concord Coalition of Tsongas and former Sen. Warren Rudman as well as Perot.
He deserves credit for seeing the writing on the wall and working to make it plain to everyone. Eventually, the need for reform will be too stark to ignore. But the longer we wait to begin fixing the mess, the more unpleasant the cleanup will be. Kerrey's warning deserves to be heeded. by CNB