I agree with Doug Elmendorf’s Washington Post op-ed in which he outlines our fundamental fiscal problem, i.e. the high costs of Social Security and Medicare, and proposes a solution—making both programs “more progressive” by which I presume he means increasing FICA max and changing the benefits formula:
Instead, we should focus on reducing Social Security and Medicare benefits for high-income beneficiaries and raising payroll taxes on workers with high earnings. For example, the Congressional Budget Office has analyzed options to lower Social Security benefits for workers in the top half of the lifetime earnings distribution but leave benefits for those in the bottom half unchanged. There are a variety of ways to increase tax revenue for Social Security by imposing a payroll tax on income above the current-law taxable maximum. Taken together, such targeted measures could eliminate much of the estimated 75-year shortfall in the system. In Medicare, additional tax revenue could be raised by boosting the payroll tax rate for workers with higher earnings. Also, the additional premiums paid by higher-income beneficiaries in Medicare Part B could be extended to cover a much larger share of beneficiaries than the current 6 percent (a figure that will increase in coming years under current law but just by about half a percentage point per year).
I also support other reforms that he dismisses: increasing the Social Security (and Medicare!) retirement age and cutting military spending while also reducing the scope of the missions we’re demanding from our military.
I wish he’d included more numbers in his op-ed. My recollection is that it’s hard to bring Social Security in line without draconian cuts even if both of the reforms above were implemented which is difficult enough. That’s why I also support something Dr. Elmendorf doesn’t even mention: restraining the increase in the Medicare reimbursement rate to the non-healthcare rate of inflation.
I honestly don’t see any way to bring our operating costs, the greatest part of which are Social Security, Medicare, military spending, and interest on the debt, into line with our income without imposing some of the pain on suppliers as well as consumers which is why I also support the limitation above.
Most of all we need more robust economic growth, something darned hard to accomplish while spending so much on things (military, education, healthcare) that are mostly or completely paid for via tax dollars and borrowing.