Analyst's note: Here is an approach that should be considered for a solution to the man-made “fiscal cliff” now facing our country. This so-called "fiscal cliff" was built primarily by the liberal-led Senate and Mr. Obama through their legislative decisions over the past four years. The "fiscal cliff" was then ignored until after the election.
As a nation, we either reform our entitlement programs of Social Security, Medicare, and Medicaid or eventually lose the country because of resulting fiscal collapse. Short-term political patches are simply not going to cut it.
You will also want to consider that Obama's are spending Christmas Holiday's in Hawaii ... at taxpayer expense estimated at $4M dollars. These problems are really not rocket science, but a reasonable and working, long-term solutions must be found.
[....] To make meaningful changes to the nation’s unsustainable budget policies, Foster and Fraser lay out four “simple, commonsense, and thoroughly vetted solutions” that already enjoy broad support across the political spectrum:
1. Raise the Social Security eligibility age to match increases in longevity. People are living longer, and entitlement programs need to be updated to reflect that fact. According to the Social Security actuaries, continuing to increase the eligibility age to 69 by the year 2034 and allowing it to rise more slowly thereafter to reflect gains in longevity could go a long way toward reducing Social Security’s funding shortfall. While this would not reduce today’s budget deficit, it would strengthen Social Security’s finances and put it on a path toward sticking around in the future.
2. Correct the cost-of-living adjustment (COLA) in Social Security. The annual COLA benefit adjustment is determined today by the Bureau of Labor Statistics’ Consumer Price Index (CPI). However, the CPI, an antiquated measure, generally overstates inflation, meaning that benefits are increased a bit too much each year to offset inflation. Again, according to the Social Security actuaries, using a more modern inflation measure would substantially reduce Social Security’s shortfall over time.
3. Raise the Medicare eligibility age to agree with Social Security. Medicare has an eligibility age problem, but unlike Social Security, the Medicare eligibility age remains stuck at 65. An obvious solution is to wait five years and then slowly raise the eligibility age to align eventually with the Social Security eligibility age. While the short-term budgetary savings would be negligible, the long-term savings in Medicare would be profound.
4. Reduce the Medicare subsidy for upper-income beneficiaries. In 2012, the average Medicare beneficiary received a subsidy of about $5,000. Subsidizing Medicare benefits for low-income seniors—and perhaps for some middle-income seniors—makes sense, but upper-income seniors do not need and should not receive a $5,000 subsidy to buy Medicare health insurance.
In addition to those reforms, Foster and Fraser list two bonus proposals that have not been considered as closely by lawmakers, but would be simple and effective:
5. Phase out Social Security benefits for upper-income retirees. As a nation, we need to ask whether today’s working families should pay payroll taxes so that upper-income retirees can continue to receive their checks. In short, Social Security should be social insurance against poverty rather than a government-run pension scheme.
6. Consolidate Medicare’s elements and collect a single higher premium. Medicare is actually three distinct components, referred to generally as Parts A, B, and D, reflecting the fact that Medicare was built up over many years. This antiquated structure is confusing and inefficient. An obvious reform is to consolidate the three distinct parts into a unified Medicare program, with a single premium, and then raise the premium to cover 35 percent of related program costs.
Continuing to raise America’s debt limit every few months is irresponsible and dangerous. And failing to address the budget deficits that give rise to this debt limit pressure every few months is equally irresponsible and dangerous. Raising taxes would weaken the economy, kill jobs, and hold down people’s wages. This is not a “solution.”
Congress and the President should instead consider these serious fixes to the drivers of out-of-control government spending. All that’s missing is for the President to take the lead, which is what Presidents are supposed to do.
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