Entitlement program reform: who’s failing whom

Column by Brian Rose. Email [email protected].

While the majority of UK students continue to be engulfed in March Madness upsets, there has been more going on in the commonwealth than most people acknowledged.

For the past couple of weeks, the Kentucky General Assembly has been in special session to decide how to fill a $139 million shortfall in the Medicaid budget for this fiscal year, which ends on June 30.

Originally, the governor proposed a plan that would take money from fiscal year 2011-2012 and used it to compensate for the shortfall in this one. He would then fill next year’s gap with new savings from “managed care” policies for some services.

However, the Senate was not comfortable trusting a balanced budget next year to savings the governor has said he would make. The Senate proposed a plan that would pay for the gap this year by making cuts to state programs, including cuts to education, which is not something legislators ever want to vote for.

The session ended with the issue unresolved.

But last week in special session the House passed HB 1, which plans to put the future of local budgets across the state in the governor’s hands. Similar to the governor’s original plan, they will be taking money from fiscal year 2011-2012, but Beshear must provide evidence of his savings by Aug. 15 or cut spending in programs across the state. If he fails to do so, it would inevitably become a quick talking point in debates for the gubernatorial race.

On Thursday, the Senate voted on another Medicaid proposal with cuts to education, but would allow for restoration of these cuts if Medicaid produces savings. Kentucky House Speaker Greg Stumbo deemed the Senate’s bill “unacceptable,” as it heads to the House. This is an example of a problem plaguing our country, and more specifically, our generation.

Entitlement spending (mainly Medicare, Medicaid and Social Security) is not only a growing problem, but it is also a growing percentage of state and federal budgets. Entitlements are the largest part of most state budgets and our federal budget. The bipartisan Congressional Budget Office reported that mandatory spending increased 10 percent ($191 billion) between 2009 and 2011.

With nearly 70 million baby boomers ready to retire and an increase in mandatory spending for the President’s health care overhaul beginning (most of which will be in 2014), the idea that our budget deficits can be halted without reform is erroneous. At this rate, our generation faces incredibly high tax rates, more restrictions and a lower standard of living.

In 2005, President George W. Bush saw his political capital fall after Democrats attacked his plan to divert some of Social Security revenues into privatized retirement plans. No matter who is attacking whom, telling people the opposing party is cutting its programs is an easy sell to the American public.

Fast forward six years: It has gotten so bad, even in this political atmosphere, House Speaker John Boehner (Rep.-Ohio) told the President that Republicans would not attack him if he were to make a proposal to reform entitlements. He also told him that he would stand with the President and take the political backlash. Kentucky’s senior Senator, Mitch McConnell (R-Ky.), also recognizes the dire situation and concedes that reform would have to be a bipartisan effort, though he agrees that Obama will have to take the lead.

So when you see headlines like what we have seen in Kentucky the past few weeks, whether it is Medicaid shortfalls or any of these programs, do not always assume someone is taking care of it. In the case of entitlements, without public approval, politicians will not likely take it on (that is, until it goes completely bankrupt). We will not see President Obama consider Republican leadership’s offers and make a proposal on entitlement reform anytime before the 2012 elections.

Hopefully, with whatever demographics of Congress and White House the 2012 elections bring us, these folks will begin to take deficit reduction seriously and that means reforming these programs. There also has to be accountability when it comes to citizens, not just our government. Stay informed, dig for the truth, think critically and our generation can be saved.