The recent offers from the White House and Republican House leadership have shown that both parties appear to be committed to finding a compromise. But lawmakers still have a long ways to go. Not only must Congress and the President find a way to replace the fiscal cliff, but they should do so with a plan that adequately addresseses our unsustainable debt problem. To do this, all ideas must be on the table.
To show the many options that lawmakers could choose from, CRFB has compiled two menus of revenue and health care options that could be considered in the fiscal cliff negotiations. The health care list includes roughly 100 options such as reforming Medicare cost-sharing, restricting Medigap coverage, equalizing payments between skilled nursing facilities and inpatient rehabilitation facilities, requiring drug rebates in Medicare, and expanding hospital penalties for re-admissions, among many others.
On the revenue side, there are roughly 70 options, which include taxing dividends as ordinary income, capping itemized deductions at various dollar amounts, limiting the value of tax expenditures for higher earners, getting rid of the mortgage interest deduction for second homes, or implementing a surtax.
Although these are not the only policies out there, these lists give a sampling of what policymakers have to work with in these negotiations. If we are going to agree on a significant bipartisan plan that will stabilize debt and put it on a downward path as a share of the economy, we need to consider all of the ideas out there.
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