The year 2008 is not just an election year. It is also the year that marks the beginning of a demographic transformation that threatens the fiscal stability of this country. Already, Social Security, Medicare and Medicaid eat up 42% of the federal budget. But this year, the first of the nearly 80 million baby boomers begin to draw out, instead of contribute to, our entitlement programs. The consequences of this shift will come quickly and will be staggering.
Already Medicare spends more each year than it takes in. In just six years, Medicare will draw more than 45% of its budget from general revenues. Already Social Security and Medicare consume 7.5% of our GDP. Unless changes are made, that figure will jump to 13% by 2030. According to the Congressional Budget Office, the increased deficits or taxation required to cover this explosion in spending would cripple the U.S. economy. A diverse coalition of 16 budget experts from seven think tanks (including American Enterprise Institute, Brookings Institution, Concord Coalition, The Heritage Foundation, New America Foundation, Progressive Policy Institute and Urban Institute) met for more than a year before producing a paper calling for honest political leadership on the issue. Now at least one congressman has come forward with an honest proposal.
Today, Rep. Paul Ryan (R-Wis.) discuss his plan “A Roadmap for America’s Future” at an event hosted by the Brookings Institution. Ryan’s road map includes changes for each of the big three entitlement programs. For Social Security, Ryan would: 1) raise the eligibility age to 67 by 2026; 2) index benefits for those now under 54 to prices; 3) create a personal account option starting in 2011.
For Medicare, Ryan would: 1) reform the entire health care system with a $2,500 per person refundable tax credit; 2) create new program by 2019 that gives each beneficiary $9,500 to enroll in a private health plan; 3) index that payment to health care inflation and gradually lower the payment to higher income beneficiaries; 4) provide low-income beneficiaries with additional payments for a medical savings account set equal to the average deductible for high-deductible health plans.
The Ryan proposals are an honest effort to solve our nation’s looming fiscal catastrophe. The nation now awaits and deserves to hear from the congressional majority party about its ideas. Talk of problems is not enough. Promising proposals is not enough. It’s time for all sides to join with Ryan and get serious about entitlement reform.
Quick Hits:
- Thanks to a loophole in congressional disclosure requirements, senators who sponsor $300 billion bailouts for irresponsible banks that include Countrywide Financial, like Sen. Chris Dodd (D-Conn.), don’t have to disclose the discount loans they knowingly received from bank “VIP” programs, like Dodd did.
- According to Rasmussen Reports, 67% of voters believe that drilling should be allowed off the coasts of California, Florida and other states and 64% believe it is at least somewhat likely that gas prices will go down if offshore oil drilling is allowed.
- Liberals do not want to drill off America’s coastline, but China and Japan put aside their rivalry and just inked a deal for Chinese companies to drill for oil, with Japanese financing, in waters near Okinawa and Shanghai.
- A House Appropriations subcommittee voted yesterday to save 1,900 scholarships for low-income D.C. children from teachers’ unions who wanted to kill them for at least another year.
- Iraqi Prime Minister Nouri al-Maliki warned Mahdi militia militants to surrender today or face battle with the Iraqi Army tomorrow.
