Hoovernomics (but a Different Hoover)
An interview with Fox News Commentator Margaret Hoover: Why she’ll argue for the proposition “Grandma’s benefits imperil Junior’s future” at the Oct. 4.
Fox News commentator Margaret Hoover
Photo by Barry Morgenstein.
Margaret Hoover's great-grandfather, President Herbert Hoover, died 13 years before she was born. Still, Margaret is confident the nation's 31st president would support her argument for the motion "Grandma's benefits imperil Junior's future" at the Oct. 4 Slate/Intelligence Squared U.S. debate. After all, in 1936, President Hoover famously remarked, "Blessed are the young, for they shall inherit the national debt."
According to Margaret, a Fox News commentator and author of American Individualism, we can lessen the debt burden on future generations by cutting entitlements now. "One of the biggest drivers of our current and future debt is entitlement spending, and promises that we've made to future generations that we won't be able to keep," she told me in an email earlier this week. Read on for excerpts from the rest of our email conversation about what piqued her interest in entitlement reform, how we can protect Junior's fiscal future.
Can you give us a sneak peek of what you'll argue on Oct. 4?
Social Security as we know it will be gone by 2037 if we do nothing. Under current law, in the mid-2030s benefits would be suddenly cut 23 percent due to program insolvency. By then roughly one-third of every American worker's wages will already be going to Medicare and Social Security, and taxes will have to be raised to cover the benefit losses. This dramatic tax hike imperils Junior's future. This is about basic math. The main point is that this isn't a traditional partisan left-versus-right ideological fight. Rather, [it's a] non-ideological and pragmatic argument for reforming our safety net so that it exists by the time I'm old enough to need it, while not changing anything for current beneficiaries or anyone near retirement.
What reforms do you propose we should make now?
First, if we act soon, we won't have to cut benefits to anyone who is near retirement. There are several thoughtful reform plans that have elements I support. For example, when Social Security was created in 1935, the retirement age was only two years shy of life expectancy, which is now 10 to 12 years longer. The federal government is on the hook for much more than it planned. Increasing the retirement age slowly over the course of several years; changing the formula for pay out of benefits from wage indexing to price indexing in some cases; considering means-testing—if Warren Buffett doesn't want his Social Security he can give it back!—are all ideas that are worth considering.
In your recent Wall Street Journal article, you wrote that the GOP currently has "a golden opportunity to win back millennials by articulating positive and pragmatic solutions to issues that affect them—starting with job creation, spending reform, entitlement reform and education reform." How does entitlement reform affect the millennial generation?
Young people understand that there is not a Social Security trust fund. Social Security is a pay-as-you-go system, where today's millennials are paying for today's seniors. The problem is that the program, without alterations, won't be able to deliver to them what they are providing for Grandma. The key to winning millennials is to stick to pragmatic solutions issue by issue. The millennial generation is characterized partly by their desire to see the system work—and they get that this system isn't working. But they also want to be part of the solution.
What does the public most commonly misunderstand about this debate?
The most common misconception that is used for political reasons to go after the senior vote is that Republicans actually just want to scrap entitlements all together. These issues have become so hyper-politicized that sincere policy makers and elected officials can't make reforms for fear of losing elections.
What first piqued your interest in the subject of entitlement reform?
In my mid-20s I worked at the White House Office of Management and Budget. I remember the first time I absorbed charts of outlays and receipts, discretionary and mandatory spending. I realized that all the programs that liberals love, and that fiscal conservatives love to hate, are becoming a smaller part of the budget, and mandatory spending in the form of entitlements and interest payments on the debt is taking up more and more of the overall budget. By 2050 entitlements will be 18 percent of GDP—the size of the entire federal budget. I remember at that moment it occurred to me that there would be no money left for ”discretionary spending,” which most of us would hardly call ”discretionary”—police, teachers, highways, education, infrastructure, transportation, veterans affairs, environment.
The opposition has argued that Social Security reform is kind of a non-issue money-wise when you compare the staggering costs of Medicare and Medicaid. They've said it should be spared, and that rather than cut Medicare and Medicaid benefits, we should focus on overhauling the entire healthcare system. What's your response to those arguments?
Well, I don't think 6 percent of GDP is a “non-issue,” which is what Social Security spending will be in 2030 according to CBO (here's a link to a chart using their numbers). The opposition would say, ”Raise taxes to solve Social Security, then focus on healthcare reforms to control costs of Medicare and Medicaid.” I think we can reform Social Security without raising taxes, which is better for economic growth. But I agree with the opposition that out of control healthcare costs must be addressed. [Former Vermont] Gov. [Howard] Dean speaks of price controls, and I'd prefer to see a series of reforms to the healthcare market place that together would cumulatively help lower costs. [For example], a tax credit for individuals to purchase their own health care outside of their employer-provided system would infuse competition into the health-care marketplace. [I'd also like to see] reforms that would enable individuals to purchase insurance across state lines, [and] medical malpractice reform.