ShareThisBy DAVID LAZARUS
Tuesday, November 21, 2006
In the run-up to Tuesday's election, the Democrats ran largely on President Bush's record and the war in Iraq. Now the real work begins.
It's time for the Democrats to put aside their political posturing and finally show leadership on some of the economic issues that the Republicans, distracted by the urgent need to cut taxes for rich people, have largely ignored for six years.
Here, then, are some helpful reminders for members of both parties who may have forgotten that public service means serving the public, not the public getting repeatedly serviced.
Let's take them in order of magnitude, from relatively fixable to stratospherically difficult.
The deficit: In the fiscal year that ended Sept. 30, the federal budget shortfall was at a four-year low of $248 billion after peaking at a record (in dollar terms) of $413 billion in 2004.
Bush says this shows his tax-cutting policies are working. But considering that he inherited a budget surplus of $236 billion when he took office in 2001, that's basically the same as spilling milk all over the floor and then patting yourself on the back for cleaning up only half.
You still have a mess on your hands.
The reality is that the national debt _ in other words, all those annual deficits rolled together into one huge credit card bill _ now totals $8.6 trillion, according to the Treasury Department.
When Bush first took office, the national debt stood at $5.6 trillion. That means the amount the government owes its creditors has soared by more than 50 percent under this president's watch _ an IOU that almost certainly means higher interest rates and taxes for generations to come.
"That money has to be paid back at some point," said Brian Riedl, chief budget analyst for the conservative Heritage Foundation. "That will likely happen through higher taxes and less spending on government benefits."
Social Security: The shortfall for Social Security alone is projected to hit $4.6 trillion over the next 75 years _ a factor primarily of the 77 million baby boomers who are about to place an unprecedented strain on government coffers.
Bush has focused on allowing people to divert a portion of their payroll taxes to private accounts in exchange for lower benefits, while at the same time maintaining the current pension system for anyone already over age 55. Even Republicans in Congress found the idea politically unworkable.
One of the chief problems with the president's approach is that it would require as much as $2 trillion in additional borrowing to make up for all the funds that would exit the Social Security system for private accounts. At the same time, it does nothing to generate new revenue.
"All the president was doing was cutting benefits without raising taxes," said Peter Diamond, an economist at the Massachusetts Institute of Technology who specializes in Social Security. "He never put forward a plan that was sufficient to address the underlying problems."
The Democrats, for their part, never did so either, preferring instead to allow Bush to take the political heat for tampering with one of the most popular federal programs in U.S. history.
Medicare: By far, the biggest and most troublesome problem on the economic horizon _ and the one that will require the greatest amount of resolve on the part of our elected officials.
Medicare, which provides health coverage for 43 million retirees and disabled people, is projected to run a funding shortfall of $32.4 trillion over the next 75 years. The cash crunch results both from all those baby boomers drawing on benefits as well as runaway health care costs.
The program's trust fund will be exhausted in 2018. From that point on, Medicare will be paying out more money each year to beneficiaries than it takes in from taxpayers.
So what do we do? All experts agree that Medicare _ along with its sister program, Medicaid _ will have to be completely revamped to meet the needs of future generations. As with Social Security, higher taxes and reduced benefits will undoubtedly be part of the picture.
Whatever else, solutions to all these problems _ not to mention other pressing concerns, such as Iraq and global warming _ will require a commitment on the part of both Congress and the president to place long-term public good before short-term political interest.
The recent conduct of both Republicans and Democrats doesn't offer much reason for hope in that regard. But it's never too late for a fresh start.
With the midterm election now behind us, that start could be today.
(Contact David Lazarus at dlazarus(at)sfchronicle.com)
