The Outlook for Social Security
population aging will remain a bigger financial challenge even than health cost inflation for decades to come. The vast majority of long-term cost growth in Social Security and Medicare, for example, is projected to take place by 2035. The CBO now attributes 64 percent of cost growth through 2035 in Social Security, Medicare, and Medicaid to population aging, even though two of these programs are health entitlements.
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I think that the level of knowledge among budget pundits has fallen sharply in the last fifteen years. Fifteen years ago, it was well know that Social Security is in need of major reform. We lost that knowledge.
My theory is that we lost that knowledge when the Bush tax cuts were enacted. The Bush tax cuts discredited budget compromisers on both sides. At that point, no Democrat could sell spending cuts to fellow Democrats and no Republican could sell tax increases to fellow Republicans. We have now had a decade for both sides to dig in, and that means a whole generation of politicians and pundits have emerged who are stuck on stupid.
Maybe the Bush tax cuts were not the causal event. Maybe there were underlying structural issues in American politics that were going to put us here anyway. But on Social Security, the Democrats were a lot closer to grasping reality in 1998 than they are today.