United We Stand, Divided We Fall

Robert Samuelson in his recent opinion piece entitled ‘We’re spending more on government, getting less’ in the Columbus Dispatch last week talks about the central federal budget story that is being missed. Social Security benefits and healthcare expenditures (Medicare, Medicaid, Obamacare, and governmental employee healthcare) are crowding out all the other programs and priorities including the Defense Department, Food Stamps, Medical research, Federal Courts, and infrastructure maintenance and expansion. He goes on to indicate that ‘by 2024, everything else (besides Social Security and Healthcare) will represent only 7.4% of … GDP , the lowest share since 1940‘. We need to address these two programs and eliminate the deficit so that the interest expense of our debt does not further squeeze out these other programs. To address the deficit, we need $700 billion of tax increases or expenditure cuts. To address the Social Security increases and to avert bankruptcy in 2033, we could increase the full retirement age from 67 to 70 (covers 44% of the deficit), increase the income taxed to 90% of the median wage (covers 36% of the deficit), freeze social security payments for 3 years, and change the cost of living increase from CPI to the chained CPI (covers 23% of the deficit). This would increase taxes by $100 billion per year and decrease expenditures by $24 billion in the first year and by $81 billion by year 3. To control healthcare expenditures, we need to move to a model of prevention and public health and away from sick care. We also need to constrain healthcare updates to the lower of actual costs or 50% of the CPI increase or 50% of the GDP growth. Finally, we can increase user fees on the Medicare population making over $100,000. This will reduce expenditures by $55 billion in the first year and increase taxes by $10 billion.
Harry Pukay-Martin