By Mike Lillis - 07/26/10 07:00 PM EDT
Neel Kashkari, the financier who headed the Wall Street bailout, is warning this week that the “me-first” attitude that rules the marketplace in general — and Wall Street in particular — should not extend to the nation’s entitlement benefits.
Instead, he argues, the nation’s seniors should be ready and willing to accept Medicare and Social Security cuts for the betterment of the nation on the whole.
“Cutting entitlement spending requires us to think beyond what is in our own immediate self-interest,” Kashkari, now the managing director of the investment firm PIMCO, writes in a Monday Washington Post op-ed. “[I]f we don’t focus on our collective good, all of us will suffer.”
Such cuts are analogous, Kashkari says, to another unpopular policy coming out of Washington in recent years: the $700 billion Troubled Asset Relief Program, or TARP, which he oversaw until May 2009.
“While it doesn’t happen often, our political system is capable of making unpopular decisions that are in our collective best interest,” he writes. In passing TARP, “leaders understood the consequence of inaction was economic devastation for Americans.”
Kashkari is urging Congress to trim the entitlements sooner than later, or risk the country’s economic collapse.
“The promises our country has made over the past few decades, combined with changing demographics and rising costs, have put us on a path to national insolvency,” he says. “Unless we control our deficits we will face stifled economic growth and impaired standards of living, perhaps even as soon as a few years from now.”
“Raising taxes cannot pay for these commitments,” he adds. “Entitlements must be cut.”
The latest estimate from the Medicare trustees warned that, at current rates of spending, the hospital fund under the popular seniors’ program would go broke within the decade. Those numbers, though, were crunched before the new healthcare reform law was enacted, leaving policy observers watching closely for the next report, which the trustees have postponed until later this summer.
Meanwhile, the Obama administration has created a bipartisan deficit commission empowered to make deficit-reducing recommendations that Congress would then be forced to consider. The commission is a thinly-veiled acknowledgement that, faced with pressure from special interests, Capitol Hill lawmakers have a bad track record enacting budget reforms on their own.