Saturday, August 6, 2011

S & P US Credit Downgrade: Implications for Social Policy

As I’m sure you’ve heard Standard and Poor's has downgraded the Nation’s credit rating from AAA to AA+. There are serious financial consequences for this action and the political spin will be interesting as well. It is likely that Congress will have to reconsider a few things, principally raising taxes and entitlement reform.

I suspect what entitlement reform is going to mean is small adjustments in Social Security's OA/Disability Programs and Medicare and a substantial hit for Medicaid. This will probably lead to, among other things, substantial cuts in health, mental health and probably child welfare. That will mean a lot of pain for the helping professions and their clients.

We could use this opportunity to redesign the programs in the Social Security Act. Changes in the labor market and in the composition of the economy, as well as demographic changes, have altered the fit between these programs and the population. One wonders if, given the current political climate if anything positive is possible.