No genuine debate about government priorities can exclude its biggest program and those loosely associated with it, Medicare and Medicaid. The exemption isn't progressive, because protecting retiree benefits will intensify pressures on the social safety net. The trick is to cut retiree benefits while minimizing the impact on the elderly poor. There are ways to do this: changing the benefit inflation-adjustment formula, fully taxing Social Security payments (affecting mostly the affluent elderly), gradually raising eligibility ages.
Deficit reduction should include higher taxes on the richest Americans. But there are practical limits. Already, Obama's proposals would, in combination with state taxes, raise some top marginal tax rates to about 50 percent. As taxes rise, so do risks of adverse economic effects and more tax avoidance. Spending must be addressed. Government has other responsibilities besides sheltering the elderly.
By evading this, Obama flirts with failure. If Democrats won't relinquish their sacred cows, Republicans will cling to theirs. We might go over the "fiscal cliff." Or any budget package may be tiny. We need to acknowledge new social realities affecting the elderly (longer life expectancy, better health, greater affluence). Benefit cuts can be introduced over a few years to minimize the threat to the recovery. But we need to start. Now.
Robert J. Samuelson is a Washington Post columnist.
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