Means and extremes: how not to balance the budget

Article Highlights

  • Means tests have negative incentives to work and save #socialsecurity #medicare

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  • Heritage's budget plan has an implicit marginal tax rate of 45% on top of 25% flat tax rate = 70%

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  • A better way to reduce #socialsecurity and #medicare outlays quickly is to base it off of lifetime earnings

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Last month, the Peter G. Peterson Foundation released budget plans authored by analysts at six think tanks from across the ideological spectrum: the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, The Heritage Foundation, and the Roosevelt Institute Campus Network. Along with Joe Antos, Alan Viard, and Alex Brill, I was one of the authors of the proposal from AEI (and I’d note that it represents the authors’ opinions and not those of AEI or other AEI scholars).

Andrew G. Biggs is a resident scholar at AEI.

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