The flight from reality

Oct 20, 2015 Published under Leadership, United States

I may not agree with all the conclusions or proposals in the article, but I certainly agree with need to discuss and address these issues head on.

By Robert J. Samuelson

We have all manner of policy proposals from the Democratic and Republican presidential candidates, but there’s a sobering disconnect between what they’re advocating and the large problems the country faces. The candidates seem caught in a time warp. Democrats plug new entitlements (college subsidies, paid family leave). Republicans embrace tax cuts. All this is familiar; it’s also a flight from reality.
Whoever wins next November will inherit three major domestic problems that, though obvious, are downplayed because the politics are so unfavorable. (I’m excluding foreign policy and climate change.) Together, these three realities will go a long way toward defining the United States in the 21st century.

First, we are an aging society. “The number of people aged 65 or older is expected to increase by 76 percent between now and 2040,” says the Congressional Budget Office (CBO). The 65-and-over share of the total population has already expanded. It’s now 15 percent, up from 11 percent in 1980. By 2040, it’s projected to be 22 percent.

Inevitably, the costs of Social Security, Medicare (federal health insurance for the elderly) and nursing home care under Medicaid (a federal-state insurance program for the poor) will grow dramatically. From 1965 to 2014, spending on Social Security and the major federal health care programs averaged 6.5 percent of the economy (gross domestic product). By 2040, the CBO projects this spending to exceed 14 percent of GDP.

If we do not trim Social Security and Medicare spending — by slowly raising eligibility ages, cutting benefits and increasing premiums for wealthier recipients — we face savage cuts in other government programs, much higher taxes, bigger deficits or all three.

Second, the United States is an immigrant society. And it’s not mainly the 11 million undocumented immigrants. They constitute only a quarter of today’s 45 million immigrants, reports a Pew study. Add in immigrants’ children and grandchildren (many born in the United States), and the total comes to 72 million, representing about half of U.S population growth since 1965.

The need here is for immigrants to assimilate: to become middle-class and to see themselves mainly as Americans. Although that’s happening, the process obviously is incomplete. Many skilled and hardworking immigrants are a boon to the economy and have moved into the mainstream. But it’s been tougher for the unskilled. In 2014, almost 24 percent of Hispanics lived below the government’s poverty line.

Unless we curb immigration of the unskilled, we will never make much progress against poverty. Note: From 1990 to 2014, the number of people below the government’s poverty line rose by 13.1 million. Slightly more than half the increase (7.1 million) occurred among Hispanics.

Third, U.S. economic growth has slowed sharply. Since World War II, annual growth has averaged 3 percent to 4 percent. Now it’s about 2 percent. Some of the slowdown reflects the exit of retiring baby boomers from the labor force, but the rest is a mystery. Lagging technological progress? A Great Recession hangover?

Whatever the cause, there is no guaranteed fix. Weaker economic growth means weaker gains in wages, salaries and tax collections. It’s harder to pay Social Security benefits, boost immigrants into the middle class, finance other public goals and satisfy the mass yearning for higher living standards. To cite a cliche: There will be more claimants for an economic pie that will be expanding more slowly.

A farsighted society would focus laserlike on these big problems with their huge implications for the future. Accommodations seem possible.

Take immigration. To give assimilation time to succeed, the country needs to limit unskilled immigrants. A grand bargain would include the gradual legalization of most of today’s undocumented workers in exchange for better border security, mandatory employer verification of worker status and curbs on legal immigration. But many Republicans reject this bargain; worse, Donald Trump has vilified immigrants as a class with his unworkable and inhumane proposal to repatriate all undocumented immigrants.

Meanwhile, Democrats show no interest in limiting the growth of Social Security and Medicare. Indeed, Hillary Clinton and Bernie Sanders think Social Security should be expanded. Even if increases were backed by new taxes, they would aggravate the government’s spending bias in favor of the elderly and away from everything else.

Elections are not just about who wins. They also measure and shape public opinion. But if we don’t candidly discuss big issues — because the choices are too unpopular — then we forfeit the opportunity to forge a crude consensus. How can democratic government act without some backing of public opinion?

We are ignoring large social realities because they are so contentious. There’s a conflict between what matters for the country and what works for the candidates. The result is that campaigns routinely fail as change agents, and we sacrifice some of our capacity to control our future.




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