Yesterday, Washington Post columnist Ezra Klein used a recent poll to argue that Americans oppose House Budget Committee Chairman Paul Ryan’s (R–WI) proposal to transform Medicare into a defined-contribution system, where seniors choose the health plan that best suits their needs. But, as always, the devil is in the details. The Washington Post–ABC News poll gave respondents the following options: “Medicare should remain as it is today, with a defined set of benefits for people over 65, OR Medicare should be changed so that people over 65 would receive a …
Obamacare will cost Americans trillions of dollars in the decades to come. To help pay for its new coverage provisions, the plan makes sweeping cuts to Medicare. But as it turns out, serious doubts exist about the likelihood of these cuts actually occurring, and evidence has already shown that lawmakers may shy away from some of the cuts. If the planned savings don’t materialize, the health care overhaul will add even more to deficit spending than already expected, further jeopardizing the nation’s fiscal future. Both the director of the Congressional …
If lawmakers are serious about tackling out-of-control government spending, they have no choice but to tackle entitlements. Medicare, Medicaid, and Social Security are the three largest entitlement programs and together represent 40.2 percent of the President’s fiscal year (FY) 2012 budget. For the sake of comparison, total spending on national defense amounts to less than half of that at 19.3 percent. Though President Obama’s rhetoric acknowledges the need for reform, his actions indicate unwillingness to address the issue. The President’s FY 2012 budget includes no substantive commitment to reduce entitlement …
Elected officials in Washington finally seem to get it that something must be done to reduce federal spending. Last week, House Republicans unveiled a plan to cut $74 billion from President Obama’s budget request for this year, and members of the Republican Study Committee have proposed an even more ambitious plan to cut $2.5 trillion over the next decade. Members of both parties in the Senate are eyeing plans for long-term deficit reduction. Even President Obama, in his 2011 State of the Union address, confessed that “we have to confront …
During last year’s State of the Union address, President Obama emphasized the need to restore fiscal responsibility in Washington. The federal government racked up a $1.3 trillion deficit in 2010, and the long-term fiscal outlook is even worse. While the average historical deficit stands at 2.9 percent of gross domestic product (GDP), by 2050, deficits will have surpassed 20 percent of GDP and will continue to climb. To tame the beast, Congress and the President will need to work together to reduce runaway spending, the main source of budget shortfalls. …
After yesterday’s Senate vote against an earmark ban, we again made the case that the damage earmarks do to our nation’s deficits go far beyond the nominal amounts spent on the earmarks themselves. The problem is that the votes earmarks secure from the sponsoring legislators then allow for ever higher levels of spending on other federal programs. Now, just one day after eight Republican Senators voted to protect earmark spending, CQ confirms our fears: New Hope for a Spending Package. The 15-day stopgap bill, or CR, buys Democrats the maximum …
Both liberals and conservatives agree that Social Security’s coming fiscal problems need to be addressed soon or they will only grow worse. A recent analysis for the Pew Charitable Trusts by Charles Blahous, one of the two public trustees of the Social Security and Medicare trust funds, and Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, shows that Social Security’s problems cannot be wished away: According to the trustees’ analysis, there is an 80 percent likelihood that the trust fund will be exhausted between 2032 …
Last week, the co-chairs of the President’s deficit commission released a report of possible proposals for the commission’s final report. Recommendations included cuts to discretionary, mandatory, and defense spending as well as tax increases. The report was a good start to the debate and will gauge the readiness of lawmakers and private citizens to make the difficult decisions needed to reduce the deficit. However, the co-chairs’ proposal does not go far enough in addressing entitlement spending and also includes burdensome tax hikes and irresponsible cuts in defense. Heritage expert Alison …
With the expiration of the 2001 and 2003 tax cuts fast approaching, the debate over whether to extend the cuts, and for whom, has taken on a new face. Proponents of allowing for tax increases on the highest income brackets, or in some cases, on all Americans, argue that this is a necessary step to reducing projected federal deficits. But, as Edward Lazear, former chairman of the President’s Council of Economic Advisors, explains in The Wall Street Journal, this creates a false choice between huge deficits or tax increases. He …
In the ongoing discussion on how best to address the nation’s out-of-control deficit spending, one proposal would increase taxes by adding a value-added tax (VAT) on top of the current tax system. Proponents argue that a new tax on consumption would raise the needed revenues to close the deficit gap without the negative economic effects of raising the income tax. However, rather than putting Washington’s fiscal house back in order, a VAT is more likely to grow the size of government and encourage growth in spending—effects that would be counterproductive …
