Over the past couple of years, we've been arguing that raising the Social Security and Medicare ages could be an important part of a fiscal reform agenda.
Readers of this blog will be familiar with the Zero Plan from the Fiscal Commission's tax reform effort.
Remember when we said last November that Congress had a lot to do by the end of the year? Well, they took care of FY 2012 appropriations, but everything else is now left to be determined or temporarily extended by the end of February (at least they have an extra day). The payroll tax cut, unemployment insurance, and doc fix extensions that passed will expire by February 29 and there could even be pressure to extend the AMT patch and the "tax extenders" that were neglected last month.
In response to the release of the Ryan-Wyden premium support plan last week, The New York Times spelled out options for reducing Medicare spending within the program's existing framework in an editorial yesterday. These options are some of the most commonly discussed out there in the budget debate, so it's useful to take a quick look at them.
This morning, Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) unveiled their proposal to significantly change Medicare, one of the largest areas of the budget and one of the biggest drivers of our long-term debt. Rep. Ryan, who unveiled his own Medicare plan earlier this year, has joined with Sen. Wyden to craft a plan that would significantly improve the long-term fiscal imbalance. These lawmakers deserve credit for having the courage to propose specific reforms to help control rising debt levels.
With so many provisions set to expire at the end of the year, CRFB has released a new paper that details what lawmakers have to extend and how they can do it in a fiscally responsible way.
With the deadline for the Super Committee to come to an agreement nearly here, the Moment of Truth Project, a project of CRFB, has released two new policy papers diving deeper into the Fiscal Commission's recommendations on how to reform federal retirement programs and Medicare cost-sharing rules. These areas of the budget can be a critical element in forging a bipartisan deal that requires shared sacrifice from everyone.
In his testimony to the Super Committee, Fiscal Commission co-chair Erskine Bowles floated a compromise plan which would, among other things, reduce health spending by $600 billion -- more than $100 billion more than the Fiscal Commission did.
Last week the federal government announced that 2012 Medicare premiums will increase for most participants by $3.50 per month from $96.40, making 2012 premiums $99.90 a month. The percent increase is roughly equivalent to the 3.6% COLA increase for Social Security announced recently, but much less than the $39 per month amount of the Social Security COLA.
As is well-known by now, the growth in entitlement programs fueled by rising health care costs and an aging population threatens an ever-increasing national debt. Our largest mandatory spending programs occupy nearly one-third of the federal budget and, in the coming years, payments out of these programs will continue to outpace the rate of growth in the overall economy. As such, serious entitlement reforms will have to play a role in a comprehensive approach to long-term debt reduction, along with other areas of the budget, in order to get our fiscal house in order.