The Free Press, Mankato, MN

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November 29, 2012

My View: Make 'entitlements' independent

— For too long Social Security and Medicare have been lumped together under the term "entitlements." Historically, entitlements have been what nobility received by right of birth, such as land, inheritance and title. But gradually the definition has been broadened to include a whole bevy of legal rights, including what American citizens have a right to by law. Thus, Social Security and Medicare are now called "entitlements," a term that has (not by accident) gained a negative connotation in political parlance.

 Let's get this straight: Social Security is a retirement and benefits program and Medicare is a health insurance program, both run by the federal government. Yet they are in trouble now because Congress and successive presidents have not been forthright to their customers, the American people, about financing them.

 If Social Security and Medicare were administered by the private sector, premiums would be adjusted to cover outlays in order for the insurer or administrator to remain solvent. But they are not. They are administered by the president as CEO and by Congress as the board of directors, both of whom have collectively shirked their duties to raise premiums to pay for current and future outlays. If they were the upper management and board of directors of an insurance company, they would be (or should be) fired.

 Numerous solutions have been proposed to correct the Social Security and Medicare shortfalls. Some are surprisingly simple in implementing but nearly impossible politically. But since politics rule the day, unfortunately we are stuck in a miasma with the problem only getting worse.

However, one solution -- and I would argue the best solution -- is not even being discussed, and that is to spin Social Security and Medicare off into independent, self-financed nonprofit government-owned entities.

 There are similar models in this country with varying levels of success. The Federal Reserve is relatively independent from political winds and whims, though under Greenspan and even Bernanke it eschewed its responsibility in favor of crazy Ayn Randian theory, which helped bring about the crash of 2008.

 The Postal Service should have been independent, but Congress has seen fit to hog-tie it with requirements and limitations so that it's more or less bound to fail. (The British Postal Service is a much better example of a government-owned institution that has been allowed to keep up with the times.)

 Fannie Mae and Freddie Mac are, of course, ridiculous constructs designed to make lots of money for a few insiders while guaranteeing losses to taxpayers.

All are flawed to a greater or lesser degree, but knowing what works and what doesn't with these and other models allows us to design a better system.

 Social Security and Medicare can be set up to be run by professional administrators and independent, nonpartisan boards empowered with guaranteeing certain benefits and certain levels of care according to broad constructs set by law. These constructs would be adjusted from time to time -- perhaps every six years in the odd year (so that political hijinks would affect the decision-making less, or hopefully so). The rest of the time the administrators and boards of Social Security and Medicare would deal with the details without political interference, including benefit adjustments and cost of the premiums and how those are allocated across the general population.

 No system is perfect, but one of this type run by professional administrators (not politicians) and boards, and monitored by independent inspectors general (to keep the administrators honest), would no doubt be much more effective than what we have today.

 We need to send this message to Congress and the president: It's time to stop playing political football with so-called "entitlements" and time to start treating these very popular and for the most part successful programs as what they are -- much needed health insurance and retirement benefits for every American citizen.

A native Californian, Leigh Pomeroy came to Mankato from Colorado in 1986. In 2004 he was the DFL candidate for Congress in Minnesota's 1st District. Today he teaches film at Minnesota State University while advocating for clean energy and environment issues.

 

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