AEIdeas

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Discussion: (10 comments)

  1. Vic Volpe

    OUR Government is based on citizens who have a net worth in excess of $50 Trillion — it was over $60 Trillion prior to the economic crisis and we lost approximately $12 Trillion during the crisis. OUR nation will produce this year (as poor as it is at 2% growth) almost $16 Trillion. If we freeze federal spending at current levels (no more than 25% of GDP) and increase our growth rate to 3-1/2 to 4% annually, set goals for spending and revenue to 20% of GDP (currently our revenues are a little over 15%), WE CAN GET OUT OF THIS MESS without any drastic cuts in social welfare/entitlement programs. The only costs the need to reigned in are medical costs (to Government and the private sector) — currently at 17% of GDP. PROMOTE A GROWTH AGENDA instead of the status quo.

  2. I certainly think we need to deal with Medicare which is 75% funded from general revenues and only 25% funded from premiums.

    Right now, a person can earn up to 70K in retirement income, own a primary home and one or more vacation homes, several cars and have a fat investment portfolio and pay just $100 a month for very good insurance – bargain basement prices for a risk pool the private market would not touch with a 10 foot pole.

    but that’s not “cutting” Medicare, that’s means-testing it and requiring higher premiums from those that can afford it.

    Next, what does it mean to “cut” Social Security when the FICA tax brings in more than 800 billion a year and pretty much matches outflows? What would you cut?

    Finally, when you add up EVERYTHING we spend on National Defense – not just the base DOD budget, but the VA, military pensions and health care, Homeland Security, FBI/CIA anti-terrorism efforts, NASA military satellites, etc, – we spend more than 1.3 trillion on National Defense alone – when our total tax revenues are about 1.5 trillion.

    this is not sustainable and we have to decide if we really want/need this level of expenditures for National Defense, what we are willing to pay for it.

    What percent of our net tax revenues – should be allocated to National Defense? Don’t measure total spending when we are a trillion in deficit and don’t use GDP which basically ignores the deficit and is basically how we got to our deficit and debt – by NOT looking at how much we actually take in – in taxes and have available to spend.

    1. “Next, what does it mean to “cut” Social Security when the FICA tax brings in more than 800 billion a year and pretty much matches outflows? What would you cut?”

      The outflows.

      1. re: ” The outflows”

        would you cut the “outflows” if they did not exceed FICA revenues?

        what does it mean to “cut” the “outflows” when the outflows match the inflows?

        if you actually cut outflows when you have sufficient inflows, would you not then end up with a surplus?

      2. Todd Mason

        This bears repeating. FICA collections have been more than SS outflows every year between 1984 and 2010. The SS trust fund turned the surplus over to the general fund and took back notes; Some $2.7 trillion of the national debt is held by SS. The interest on it plus FICA collections pays benefits until 2020. The principal plus FICA pays benefits until 2030. So you are not cutting “entitlements” by means testing benefts or jiggering COL formulas. You are confiscating money held in trust for Americans who need it.
        Yes, many SS recipients do not need the money. I’d be happy to entertain a plan that makes SS viable for young workers AS LONG AS THE TRUST GETS ITS $2.7 TRILLION PLUS INTEREST. I won’t be happy with a plan that p***es the money away again on tax cuts that don’t work.

        1. It’s actually worse than that because the anti-SS propaganda is taking place right now ostensibly because it’s an entitlement that is impacting the budget and deficit and nothing could be further from the truth.

          lumping Medicare and SS into the same situation really misdirects what the real focus should be – which is Medicare Parts B, C, and D which ARE impacting the deficit and debt and DO need to be reformed now.

          we lose this perspective when we lump any/all entitlements into one generic anti-entitlement sound bite.

  3. Savior Fair

    re: Right now, a person can earn up to 70K in retirement income, own a primary home and one or more vacation homes, several cars and have a fat investment portfolio and pay just $100 a month for very good insurance – bargain basement prices for a risk pool the private market would not touch with a 10 foot pole.

    The profile of the average middle class retiree who concientiously contributed to their retirement funds, owns a modest primary residence, lived below their means and in mid-life acquired a small vacation home at the shore or in the mountains.

    At age 58, in seven years, you precisely identified me. Yet I am solidly middle-middle class. Lived way below my means and diligently saved for retirement.

    1. re: ” middle class retiree who concientiously contributed to their retirement funds”

      yes. but you only contributed to Part A with your FICA.

      you did not pay a penny into Part B (C or D) and that’s what the $100.00 premium is for – and it costs $400.00 and taxpayers are picking up $300.00 of that cost.

      what say you?

      1. Savior Fair

        re: yes. but you only contributed to Part A with your FICA. you did not pay a penny into Part B (C or D) and that’s what the $100.00 premium is for – and it costs $400.00 and taxpayers are picking up $300.00 of that cost.

        I think you’ve answered your own question. Let’s get ride of Part B, C and D.
        I never supported part D when it became law.

        1. re: ” Let’s get ride of Part B, C and D.
          I never supported part D when it became law.”

          you don’t need to get rid of Parts B and D as long as the cost to taxpayers is minimal and fair and more to the point, that the people who get 70K and up in retirement income do pay substantially more.

          I’d get rid of Part C as currently implemented because it essentially has the taxpayer cover the 20% co-pay “gap” and that’s a bad thing in my view because the 20% co-pay was always intended to make the senior have some skin in the costs of discretionary health care.

          Keep in mind also – that all retired military also use Medicare. They, and civilian DOD workers get essentially kicked off their active duty/employee health care plans and are strongly encouraged to sign up for Part B.

          The problem that we have right now is that we really do not need to kill Part B but it does need to require a much higher payment level from those that can afford it.

          If you kill Part B all together, you’re going to end up with a substantial number of people becoming destitute and ended up at ERs.

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