Hoover Institution Press Release
Stanford—Hoover Institution Press today released Entitlement Spending: Our Coming Fiscal Tsunami, by David Koitz. Although the nation’s largest entitlement programs—Medicare, Medicaid, and Social Security—are perceived as pillars of our governmental safety net, Koitz argues that those programs are actually the largest drivers of a severe and impending fiscal crisis. Koitz reminds readers that our national debt is at its highest level in sixty years and over the next decade alone, we could add nearly $13 trillion to it if we don’t change course. He explains we can no longer ignore the issue or set it aside. In the interest of our nation’s economic stability and well-being, he argues, policy makers must put forth a clear and comprehensive plan to trim the growth of those three programs.
The book offers two principal policy paths: one, that our increasing longevity during the past seventy-five years should be recognized by raising the age at which we become eligible for Medicare and Social Security benefits; two, that spiraling health care costs will only be tamed by more out-of-pocket spending by health care consumers. Medicare and Medicaid need to lead by example through measures that limit spending increases, impose higher deductibles and copays, and allow market forces to play a role by giving recipients the opportunity to use their Medicare dollars to buy their own health insurance.
The problem with our entitlement programs, Koitz contends, is not that they are failing us but rather that they are driving up our Treasury’s debt at a rate faster than we can possibly accommodate, particularly as more baby boomers reach retirement age. Thus, our economy’s ability to grow, our national security, and our standard of living are threatened. Although we have the world’s largest economy, we are accountable for one-fourth of the debt issued by all governments worldwide. It may seem inconceivable, Koitz argues, but someday the world may not want to lend us more money. If the economy slips because of the weight of our debt, the dollar’s dominance could too. He emphasizes that the United States desperately needs policy makers who are willing to address the risk of a full-blown debt calamity by reining in spending and modifying expectations of future Medicare, Medicaid, and Social Security recipients. The problem, he argues, is too immense and too imminent to “kick the can down the road again. It’s our problem in our time and it would be unconscionable to pass it along to future generations.”
Our emerging dilemma—how will we climb a mountain of entitlement debt?
The federal government is today facing the largest fiscal challenge since World War II. The fundamental question before the nation is whether the fiscal course the government is on can continue. In Entitlement Spending: Our Coming Fiscal Tsunami, David Koitz argues that it is not a Democratic or Republican problem; it is an American problem. As it comes ever closer, he contends, the need for political convergence becomes ever more pressing. Written so as to make the issues understandable to nonexperts, the book is designed to raise public awareness of the urgency to act by clarifying misconceptions and presenting the facts on the impending economic crisis driven by the federal government’s enormous spending on entitlement programs. Although Medicare, Medicaid, and Social Security are idolized as pillars of the nation’s safety net, he shows why those programs are in fact the largest drivers of our looming fiscal problem. He explains how, if an effective remedy is to emerge, those programs must contribute heavily to the changes lawmakers consider and offers various policy directions for reining in their spending.
Koitz suggests, for instance, that increasing out-of-pocket spending by health care consumers may be the only effective way to sensitize both medical providers and patients to the costs of care, contending that, regardless of how this may affect utilization or medical practices, major limits are needed in Medicare and Medicaid expenditures because they have become unaffordable. Whether by raising the Medicare eligibility age above sixty-five, imposing higher deductibles and co-payments, or converting Medicare to a program supporting the purchase of health insurance in the private market, the program’s expenditures must be reined in and the expectations of future Medicare recipients balanced against the risks of a governmental debt calamity. For Social Security, he says, the public must understand that much of the system’s financial problems are due to the large gains in longevity since the system’s inception in the 1930s and the much larger lifetime benefits now being paid to current retirees and projected to be paid to future generations. Social Security too, he contends, needs major constraints, many of which have long lingered and are well understood on Capitol Hill; what is lacking is political courage.
He emphasizes that the nation’s long-term economic outlook is now predicated on issuing an unsustainable amount of debt and that for policy makers to ignore that condition and the things creating it, or to pass the buck to future generations to make the hard choices, is simply irresponsible. He concludes “it’s not courage to make clear what for decades was opaque. It’s not courage to act responsibly and do what’s seemingly hard. It’s statesmanship. It’s about the real job of legislating.
David Koitz is a visiting fellow at the Hoover Institution and a consultant involved with a variety of public policy matters. Serving as an analyst on Capitol Hill for more than twenty-five years, Koitz has worked for numerous members of Congress and various congressional committees. Born in Springfield, Massachusetts, he is a graduate of the University of Massachusetts and the American University.
You can also read the press release at Stanford News