Maya MacGuineas: Modernizing Social Security and Medicare Starts with Leadership

Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt, was interviewed by the George W. Bush Institute and appeared in The Catalyst. It is reposted here.

Social Security, Medicare, and other entitlement programs face an uncertain future as the funds that run the programs dwindle. Strong leadership will be needed to save these programs.

We asked Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of Campaign to Fix the Debt, these questions about one of America’s most pressing domestic challenges: reforming entitlement programs.

MacGuineas has spent a large part of her professional career working on budget issues, advising members of both parties on tax and spending policies. As she makes it clear, modernizing these programs starts with strong leadership.

What happens if we do nothing about reforming entitlement programs like Social Security and Medicare? 

Actually, we can’t do nothing. 

We can either make gradual thoughtful changes in advance of when the trust funds run out of reserves or we will be forced to make abrupt more painful ones when they do. The longer we wait, the more we lose the opportunity to restructure benefits and revenues in a more sensible way. It is clearly in everyone’s benefit, especially those who depend upon the programs, for Washington to make thoughtful and targeted changes in advance of the last minute.

Honestly, I think we have waited so long that we have lost the opportunity to do this in the smartest ways possible. If we had made changes earlier they would have ended up being much less onerous than they will now have to be, and as we continue to wait, it becomes more and more difficult.

If we had made changes earlier they would have ended up being much less onerous than they will now have to be, and as we continue to wait, it becomes more and more difficult.

This is particularly the case as the large baby boom generation moves into retirement. If they had paid a little more while working, and had waited a little longer to retire, particularly those who could most afford to, the system would have been in far better shape. The more people we exempt from benefit changes, the more expensive it becomes for everybody else.

What stuns me is that people advocating doing nothing are essentially asking for abrupt, deep cuts in benefits for retirees once the trust funds run out of money. That includes the most vulnerable who pretty much depend upon the program for all their livelihoods. That is unconscionable.

How would these changes you are talking about affect the lives of Americans?

If we don’t make changes on our own terms but wait until they are forced on us from the trust funds, people who don’t need the programs will be fine. Those who depend upon them for some of their benefits would feel a squeeze. People who thoroughly depend upon Social Security for retirement or disability benefits would face a massive catastrophe.

They would lose a significant share of their benefits. And, given their needs, those benefits are already quite small.

But if we made changes on our own terms, we could protect those who need the program most and spread the changes amongst everyone else in a more manageable way.

Those are practical ways to stop from going over the cliff. Give us an idea when we could go over the fiscal cliff and not get back. What year or years are we talking about? 2020? 2025?

There is not an on-and-off switch. Every year we wait, the more painful it becomes. And that already has started.

It’s already at the point where the changes we make will be more painful than they would have been for those who have less room to adapt. So, with every year, the more benefit changes will creep down from the very well-off to more of the middle class to folks who most depend upon benefits.  Or if we get pushed into doing a larger amount of the overall fix through revenues in order to protect beneficiaries, that will divert major potential budgetary resources from other important uses such as more public investments and a stronger safety for the truly vulnerable.

Obviously, if we wait until the last minute, the hardship becomes unimaginable. And I don’t think we will wait until the last minute. It is just too dangerous. But we have lost the window to make the smartest changes by not implementing reforms before baby boomers start to enter retirement.

Going back to practical steps, how do we start making them?

It boils down to political leadership. The president and congressional leaders are going to have to make Social Security reform a priority.

The solutions are all well-known. They could pull together a group of legislators to come up with a plan, or they could ask a group of outside experts to do so. There are only so many levers that you can pull to fix Social Security: revenues, retirement age, benefit formulas, cost-of-living calculations, and, hopefully, some benefit expansion for the poorest participants. It is about putting together a balanced combination of them. 

And then you need the political will, which our leaders should have. If you care about people who participate in the program, the rest of the budget, or the economy, it only makes sense to do this sooner rather than later. It all comes down to political will and leadership.

We have been mainly talking about Social Security. What about Medicare?

Medicare is far more about changing the overall health care system, along with making changes to the program that would create an incentive to save on costs. That would allow us to get control of Medicare so it doesn’t keep squeezing out other parts of the budget.

Is there a consensus in Washington that we need to do Social Security first?

There is not a consensus in Washington on anything.

Leadership will be key. The country can be so great – with a strong economy, growth that helps those on all parts of the income spectrum, and government programs that can help protect against excessive risks. But we need to make real structural changes to our entitlement programs and deal with our fiscal challenges as a large part of getting on that track. We have delayed for way too long.

"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.