DENVER — PROGRESSIVITY in taxation -- the idea that those who earn more should pay more of the costs of government -- is an old idea that has found new vigor.
Congress, insistent on taxing the rich, has just passed a budget that gives approximately 60 percent of our federal social spending to just 12 percent of our citizens: Americans over 65. Yet, the elderly have the highest disposable income and the lowest rates of poverty of any group in America. They own one-third of all household assets and 40 percent of all financial assets.
Poverty in America is more likely to wear diapers than a hearing aid. Nevertheless, Congress in 1987 spent $10,010 per capita on the elderly and only $854 per child. We may want to tax the rich, but we also distribute our federal largess not on the basis of who needs it but on who has the political power.
There's little question that the elderly are the most politically powerful group in America. It's highly questionable whether they are the most deserving.
To be sure, there are many poor Americans over 65, and I'm very proud that my Democratic Party pioneered Social Security and Medicare, which were invaluable in lifting many of the elderly out of poverty. But today there are many retirees receiving overly generous federal transfer payments who just don't need them.
For example, through Medicare we are paying the health costs of hundreds of thousands of elderly millionaires, while 20 percent of America's kids don't have all their vaccinations and 600,000 American women give birth every year without adequate or any prenatal care. We have recently amended Medicare to pay for heart transplants, yet 31 million Americans go without health insurance. We have a life expectancy rate of 80 years, the highest in the world, yet we rank 18th in infant mortality.
Even programs designed specifically for the poor are being slanted toward the elderly. Medicaid, a program aimed originally at poor women and children, today devotes 27.6 percent of its funds to long-term care for the elderly. While this money does go toward the poor elderly, it is nevertheless symbolic of how our limited resources are being taken away from the majority of the population.
Public policy should transfer money from the rich to the poor, not from the young to the old.
We have created an excessive sense of entitlement in the elderly, and they are vociferous in defending and enlarging their benefits. Our political establishment, supposedly trained to meet new needs with new spending, finds it impossible to reallocate existing spending. But there is not enough new wealth being created to solve all our new challenges. New needs, to some degree, will have to come from reallocated resources.
In short, we cannot make fiscal sense of our future without eventually taking on entitlements for the elderly. Moreover, if we are to leave a sustainable nation for our children, we have to spend more money on the next generation and less money on the last one.
It is not good public policy to transfer federal funds to the millionaire elderly while less than 30 percent of our children in need have access to Headstart programs.
If we are going to initiate a luxury tax, why don't we tax further Social Security and Medicare for those seniors who are in the high income brackets?
Richard D. Lamm, former governor of Colorado, is professor of public policy at the University of Denver.