Debate over size of federal government is between generations

  • Article by: DAVID LAUTER , Tribune Washington Bureau
  • Updated: January 2, 2013 - 8:38 PM

ANALYSIS: How much of limited federal funds should go to retirees and how much should go to much younger people and their families?

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Two members of the House left the U.S. Capitol late Tuesday after spending much of the day mulling the looming fiscal crisis.

Photo: T.j. Kirkpatrick, New York Times

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WASHINGTON - Congress has become the butt of late-night comedians for waiting until the last minute to do any work, yet its procrastination involves something more than fecklessness: The issue over which it keeps stumbling not only separates its two parties into warring camps, but divides them internally.

At its core, the debate over the size of government and how to pay for it pits the interests of the huge baby boom generation, now mostly in their 50s and 60s, against the needs of the even larger cohort in their teens and 20s.

With limited government money to spend, how much should go to paying medical bills for retirees vs. subsidizing college loans, job training and health care for young families with children?

As they grapple with that, the party of small government increasingly relies on the votes of people dependent on entitlement spending. And the party that created the massive government programs for retirees has more and more become the political home of the young.

The part of the debate that ended Tuesday night mostly involved how limited the government's resources would be. Congress agreed to add about $620 billion to federal revenue over the next decade. But the vote locked in place the Bush-era tax cuts for everyone with incomes below $400,000 a year, a decision that denied the Treasury about $4 trillion over the same period.

That vote did not end the tax debate, but it did settle the biggest part of it. White House officials say that this spring, when the next budget deadline arrives, President Obama will seek several hundred billion dollars more over the next 10 years. But even if he prevails over Republican opposition, the increment would be relatively small.

Increasingly, therefore, the coming fights over the budget will focus on the topic that both sides have shied away from: spending on retirees.

To a limited degree

Both parties prefer to focus voters' attention elsewhere. Democrats like to blame the rise in the national debt on the George W. Bush-era tax cuts -- 98 percent of which Congress just voted to renew -- and the cost of the wars in Iraq and Afghanistan. Republicans like to point to Obama's economic stimulus efforts.

Each of those policies has contributed to the debt, but only to a limited degree. The real driver behind the government's long-term debt problem comes from the huge number of people entering retirement.

Over the past 40 years, the federal government has spent, on average, about 18.5 percent of the U.S. gross domestic product -- the overall output of the economy. At the current rate of increase, Social Security and Medicare alone would equal 16 percent of the economy by the time the number of retirees stops growing, about 25 years from now, the Congressional Budget Office projects. Most of the increase would come from the cost of health care.

Obama acknowledged that problem when he spoke Tuesday night.

"The aging population and the rising cost of health care makes Medicare the biggest contributor to our deficit," he said. "I believe we've got to find ways to reform that program without hurting seniors who count on it to survive."

That's a more straightforward acknowledgment of the problem than political figures typically offer.

Liberal Democrats typically prefer to talk about taxes, not spending.

Republican congressional leaders tend to do what House Speaker John Boehner did in his statement on Tuesday night: avoid naming any specific programs and instead use euphemisms. He said he would push for "significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

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