Six ways Democrats are supportive of entitlement reform
January 28, 2013 at 7:27 pm in News by Dustin Siggins 9 Comments
In Congress, there is a general split among Members when it comes to spending – those who are willing to take steps to prevent a fiscal crisis, and those who are not. Most Members recognize the unsustainability of continuous large deficits, but too many in both parties are unwilling to take political risks in solving the problem. Others are ideologically supportive of certain programs, regardless of their costs. Republicans often will not cut defense, for example, and Democrats will often not cut entitlement spending.
This split is often seen off of Capitol Hill as well. However, on Sunday night, Politico reported that at least two prominent liberal think tanks have come out in support of policies that at least partially address the most important part of the federal budget: Social Security and Medicare, which are currently one-third of the federal budget and growing.
Tea Party activists won’t like all of the proposals – more than one consists exclusively of tax increases, for example – but it is encouraging to be reminded that, the power of math is not always ignored in Washington.
Here are the proposals, with a brief description following each one, along with an estimate of its savings. Analysis of each proposal comes after the list:
Social Security: Chained CPI, $112 billion: Changes the way Social Security is calculated by tweaking the consumer price index.
Social Security: Lift cap on taxable earnings, $500 billion or more: Eliminates the cap on taxes, which combined with a deal to reduce benefits could reduce spending by $500 billion or more.
Social Security: Change the benefit formula, half the Social Security shortfall: Means-test the program so upper-income seniors would receive less, essentially turning Social Security into a support system for poorer seniors.
Medicare: Expanded means-testing, $20 billion: Charge higher premiums to wealthy seniors to offset some costs of Medicare.
Medicare: Faster payment reforms, $10 billion: Institute certain payment and other reforms found in Obamacare more quickly, in imitation of successful private-sector organizations like the Mayo Clinic.
Medicare: Drug rebates, $135 billion: Require drug companies to pay a rebate for people on Medicare and Medicaid.
Unfortunately, each of these proposals has significant weaknesses:
Chained CPI has a great amount of support among Democrats. Politico notes that President Obama, two liberal think tanks, and House Minority Leader Nancy Pelosi (D-CA) have all supported variations of this proposal. The negative side of this is how it will take away money seniors have forcibly (i.e. federal law) “invested” for their retirements. Of course, money will vanish Enron-style when the program’s trust fund runs out sometime in the next 20 years.
Lifting the cap on taxable earnings has a couple of major flaws. First, this is a tax increase, and raising taxes has been a promised and failed panacea for liberals on Social Security for decades. Second, Politico’s headline claim that raising taxes would save $500 billion in Social Security deficits is countered in the description, where it’s noted the taxes plus another deal would be worth $500 billion.
Changing the benefit formula is a popular solution. Politico reports that this is a proposal with much support on the Republican side of the aisle, including by Rep. Paul Ryan (R-WI). This is essentially means-testing, or turning Social Security into a support system for poorer seniors rather than a full retirement system for all Americans. However, wealthier seniors are already being given a raw deal on Social Security, at least compared to how much they “invested” over their lifetimes. So while means-testing is a supportable idea, the continued scalping of the wealthy is going to cause other harms in the long run, especially if taxes continue to rise.
Raising Medicare premiums has at least two major problems. First, higher premiums are a tax increase. Second, while Medicare is in worse financial shape than Social Security – and will need severe changes within 12 years if nothing is done – cutting $20 billion will do almost nothing to prevent the program from going bankrupt. It is a drop in the bucket compared to Medicare’s budget.
Experiments are popular with many centrist and liberal Members of Congress and policy wonks. While these experiments could replace some of the support by Democrats for the Independent Payment Advisory Board, the rationing board in Obamacare, note the key word: experiments. The fact is, the payment reform movement in health care is very theoretical, and could cost more in the long run, as appears to be happening with electronic medical records. While payment reforms have some success in the private sector, even organizations that have successfully implemented it have pushed back against the micro-managing style of the Obamacare payment reforms.
Drug rebates would indeed save money, but it would have the effect of expanding the terrible government policy which tells companies when they have made too much money. It also could lead to some kind of Big Government/Big Business deal that is bad for the country, as we saw with the individual mandate/pre-existing conditions deal in Obamacare.
In the end, few of the ideas discussed above will actually prevent a fiscal collapse of either Social Security or Medicare, or actually move the nation towards a freer market and prevention of overspending. This is due to both the lack of quality of the proposals, as well as how they are based upon official government projections of Medicare and Social Security, both of which are notoriously inaccurate. However, it is encouraging to see that many who typically support more government spending recognize at least some of their most cherished programs must be changed in order to prevent harm to future generations, even if their proposals are greatly flawed.
Social Security and Medicare . “Entitlements” Are lavish retirement and medical care offered to congressmen and public sector employees also considered an “entitlement ?” Are the extravagant :meetings regularly held by government agencies (GSA) and others an entitlement ? Would Michelle Obama’s Royal vacations and perks be an entitlement ? The list could go on ad infinitum ..
Not sure why these are listed as supported by the Democrats? These changes are due to pressure from the House Republicans, and was a compromise to extend tax cuts to 99% of Americans.
Social Security and Medicare are not sustainable in it’s current form. For all you people who complain about the cost of everything else except the biggest programs are on the wrong side. The Republicans want to cut your benefits! You should be siding with Obama and the other Liberals.
The only way social security can be sustained is by limiting dissbursments to coincide with collections. The cut dealt out that just expired was proof-positive that the people entrusted with managing our government are politicians before all else, why would they cut the income of a dedicated program allready faceing shortfalls?
The private sector produces goods, goods have value based upon who wants them and how badly. Simply going to the rapidly drying well of American made goods and taking a bigger cut of the pie only drives more production offshore, taxing the wealthy is taxing those in position to make that decision. So the well rns dry and the solution of those who pumped to much is to sling mud.
Easy Solution is to audit all those on SSI and SSDI. Too many able bodied people living on the system.
Bob – Good point!. I read somewhere that 1 out of 13 workers are on disability. In the 1990′s it was 1 out of 50. With medical advances, you would think this number would be less not more.
Also on a different note, McCain and Marco Rubio want to give illegal workers amnesty (immediate provisional status)! This is nuts! I can’t blame these people for wanting to come to America, but we can’t afford to take everyone in. We need to be more like Europe and punish the employers with enormous fines for hiring illegals.
Let’s fix Social Security right here and now:
IF YOU DIDN’T PAY INTO SOCIAL SECURITY, YOU DON’T GET ANYTHING FROM SOCIAL SECURITY.
The Democrats have hijacked Social Security and turned it into a catch-all welfare program. They hide the welfare behind those who worked their whole lives and paid into the Social Security INSURANCE program. When their welfare inside Social Security is threatened, they threaten the benefits of those who actually paid for the benefits they are receiving. This must stop. The only way to stop it is to remove welfare from Social Security.
Now that we’ve fixed Social Security, what other problem do you have?
Immigration “reform”…
There should be no special path to citizenship. If a person has been working here illegally, document them and give them a H1b work visa. Those who do not work get deported.
Nobody knows how many illegal aliens are here. Fifteen years ago the official government estimate was about 12 million. Today they promote a rediculous number of 11 million. There may be 11 million illegal aliens in the states of California and Texas by themselves.
The government is pulling the woll over our eyes… AGAIN.
Stop any legislation that does not have a number of illegal aliens, thus capping any conditions granted.
STOP ANY LEGISLATION THAT DOES NOT HAVE A MUNBER OF ILLEGAL ALIENS, CAPPING ANY CONDITIONS GRANTED.
About tax increases…
Already, 47 percent of households pay no net income taxes. That means the other half of the population is paying all the income taxes for the entire country.
First, before anything else is discussed regarding tax increases, the number of people paying a net income tax must be increased. This may mean eliminating food stamps for some households, thus forcing them to feel the effect of the dramatic inflation of food prices, which they do not feel when they get increasing food stamp subsistence.
I noticed the Farm Bill that was 80 percent welfarre isn’t being discussed, and Boehner is the Speaker, so the conclusion is Boehner caved on everything… AGAIN… and that option is no longer available to us.
Start by increasing the number of people paying taxes before any discussion about changing the tax rates begins.
I personally favor a flat tax for EVERYONE. No exceptions. No excuses.
SSDI for those with strong medical proof of a permanent disabling condition (such ‘proof’ of disability is CAT scans, x-rays, blood tests, etc. in that such critical medical data that one can NOT fraudulently modify) must NOT be financially or medically affected otherwise, it’s just another political shell game, save the government some money by cutting from ‘one’ program, only, to immediately further fund ‘other’ existing programs of varying degrees of having little or no proactive impact on the majority of citizens.
Special interests and lobbyist groups and the elected officials who gain power and wealth through these immoral political manuvering ‘agenda’s', are the BIGGEST elitist entitlement budget busters versus ANY social programs.
President Franklin D. Roosevelt got Social Security enacted into legislation AFTER the Great Depression so as to AVOID any future financial and medical catastrophies upon the USA citizens and now in 2011 to present politics of March 2013, the Republicans are trying to repeal Medicare, make massive financial cuts that dismantle and destroy Social Security programs…such cuts to SSI, SSDI and MEDICARE would create ANOTHER housing loss crisis, lack of medical and medicines offered to assist those with disabling and poor health conditions and sadly, create a new class of homeless, poor and disadvantged USA citizens!
These entitlement reform proposals by the Republican party are insanely psychotic, disturbing and horribly out of touch with modern times reality, the USA government could enact term limits, reduce their operating budgets, salaries, wages, pensions, political contributions, lifetime healthcare benefits, etc. and THAT then ‘if’ ever done, would reduce government size and financial waste VERSUS, cutting from programs that millions of taxpayers have paid tax dues into for over 70+ years and now in 2013, the social programs taxes citizens have paid taxes on, are proposed to be slashed and dismantled via the strong urgings of the Republican party…BS, what an injustice being ‘proposed’!!
Financial budget cuts can readily be otjerwise, made up from hundreds of other NON social security funding government programs that would NOT, dramatically affect the poor, elderly or disabled USA citizens!
Who ‘exactly’, would benefit from the present day 2013 Republican party entitlement ravages other than, the Republicam politicians, ultra wealthy citizens, pharmacy, medical and insurance companies oh my…imagine that, special interest companies, groups and Republican politicians get ‘rewarded’, by taking away from those poor, elderly, disabled and disadvantaged USA citizens who NEED such financial and medical assistance to survive and exist with some degree of quality of life!
Shame, upon anyone who would rob, hurt or cause further distress among those already in poor physical health or old in age…how selfish and heartless is the insanely greedy Republican party??