This is the first of two editorials on the fiscal cliff. Next: Taxes.
8:44PM EST November 14. 2012 - Whenever talk turns to the federal deficit, activists on the political left have a common refrain: Don't touch our benefits! Since Nov. 6, they've been trying out a variant that goes something like this: Because our side won the election, definitely don't touch our benefits!
OPPOSING VIEW: Keep your hands off our benefits
This argument, being made by labor and seniors groups in an advertising and grass-roots campaign, is as nonsensical as it is mistaken. It rivals Republican intransigence on taxes as an obstacle to taming the deficit and averting the year-end "fiscal cliff" of spending cuts and tax hikes.
Yes, taxes need to go up, and not just for the wealthiest Americans. And yes, there's room for cuts in the Pentagon and other federal departments. But changes in these areas, as needed as they may be, would still be overwhelmed by the burst in spending on Social Security and Medicare as the Baby Boom generation retires and lifespans increase.
Of the two programs, Social Security is by far the easier to fix. In 1983, a bipartisan agreement shored up the program for decades. It can be rescued again, much as it was then, by gradually raising the retirement age for able-bodied workers and bumping up the payroll tax. Other options include slowly reducing the rate of benefit growth, raising the wage cap and tightening eligibility requirements for disability
The more urgent and difficult issue is the surge in spending on Medicare, Medicaid and related programs. The numbers tell the story. In 1990, Washington spent $180 billion on health care, accounting for 14% of federal spending. In 2017, the expected tab is $1.4 trillion, or 30% of federal spending. As President Obama said at his news conference Wednesday, "Health care costs continue to be the biggest driver of our deficits."
One obvious place to start is bringing the Medicare eligibility age in line with that of Social Security. In their failed budget negotiations in 2011, Obama and House Speaker John Boehner tentatively agreed to raise it from 65 to 67. Such a rise would cut the government's bill while increasing the share of the population in market-based health care.
A major argument against raising the age has been that people near retirement often can't find health coverage if they don't get it through an employer. But with ObamaCare set to take effect in 2014, Americans will have access to affordable insurance no matter their age or medical history. Some of these people would have to be subsidized, but under Medicare they all are.
Additional health care savings could be achieved by having the government pay for the quality of results, not for the quantity of services rendered. ObamaCare moves in that direction, but only gingerly. Asking wealthy seniors to pay higher Medicare premiums and co-pays than they do now is another worthwhile idea. And so is charging veterans more than the $45 a month they pay for family coverage as part of the military's Tricare program.
Beyond these are a number of Republican ideas for saving money and reducing waste in the health care system. Lawsuit reform would reduce unnecessary tests and other forms of "defensive" medicine. Ending the unlimited tax exemption for insurance premiums would put downward pressure on health costs. And if ObamaCare's cost-control experiments don't work, vice presidential candidate Paul Ryan's Medicare voucher idea merits another look. Interestingly, RyanCare has striking similarities with ObamaCare.
These are the types of changes that would turn the fiscal cliff from a crisis into an opportunity. It won't be comfortable. Budget-cutting never is. Nor is change. But the aging of the Baby Boom, combined with runaway medical inflation, makes both unavoidable. Now is not the time to take anything off the table.
Source: http://www.news.theusalinks.com/2012/11/15/editorial-cut-entitlements-to-control-debt/
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