Bush and the Boomers

By Mark Mills, CFP

In his State of the Union speech this week Boomer-in-Chief George Bush raised the subject of federal spending on entitlements by noting that both he and former President Bill Clinton turn 60 this year.

President Bush said, “By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices -- staggering tax increases, immense deficits, or deep cuts in every category of spending.”

Bush got a rousing mock cheer from the Democrats when he said, “Congress did not act last year on my proposal to save Social Security.” It was not meant as an applause line; he finished the sentence by saying, “yet the rising cost of entitlements is a problem that is not going away.”

He is right. We need to do something. In calling for a bipartisan commission to examine the full impact of baby boom retirements on Social Security, Medicare, and Medicaid the President pretty much tossed in the towel on his “ownership society” vision for social security. It will take another approach to build a consensus.

I wrote a blog critical of Bush’s private account plan last year (Feb. 27, 2005). I said that so much risk, burden, and responsibility are already being shifted from institutions to individuals that the country needs to preserve a system that lives up to its name: social security.

We just may not be able to enjoy the generous level of benefits that the system now provides. I could stomach a cutback. But the sooner we face the problem the less drastic the solutions will have to be. And the more time people will have to adjust to a new reality.

Let’s find the ways to fix Social Security. From adjusting how benefits are calculated to raising the ceiling on wages that are subject to the payroll tax, many alternatives are available to put Social Security on a sound footing for generations to come.

One trend that may help: if Boomers keep working past age 65, as many plan to, the government will collect huge sums in payroll taxes that it is not expecting.

Medicare and Medicaid are an even bigger black hole for the budget. And the misery of those two programs has plenty of company: the entire health care system. We need to make some major overhauls in providing and financing health care for people of all ages.

So, come on Washington. It’s time to work up the guts, determination, and creativity to solve these problems. I don’t want to go to war with my children’s generation over a depleted federal treasury. We should reduce our national debt, invest for our grandchildren, and provide an adequate level of security for Boomers as they age gracefully.

“And one year from now I will convene the leaders of Congress to craft historic, bipartisan legislation to achieve a landmark for our generation -- a Social Security system that is strong in the 21st century,” said the President. President Bill Clinton, that is, in his State of the Union speech on January 27, 1998. I guess we’re about due for another commission.


White House photo of President Bush leaving the House Chamber
after his 2006 State of the Union speech