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A Fiscal ‘Tsunami’
On the other side of the aisle, Barack Obama and John Edwards have proposed to raise the ceiling on payroll taxes as a way of getting more money into Social Security. And they've accused Hillary Clinton of ducking the issue. How much would raising the ceiling help?
Well, it depends how much you raise the ceiling. If additional revenues are going to be part of a Social Security reform package, then the most likely form that will take is an increase in the taxable wage base in order to have that burden be borne by those who are better off.
Elderly people represented by the AARP vote in larger numbers than young people and that has made it politically difficult for anybody in office to make these tough choices that you're talking about. How do you get around that?
I think most seniors care about their kids and their grandkids. And I think that once they are told the truth--that the federal government is spending more money than it makes, that it is charging the national credit card, and it is expecting their kids and grandkids to pay it off with compound interest--[they will see that] that is fiscally irresponsible and morally wrong.
What about the notion that we can grow our way out of this, that if you lower taxes and get more growth and more taxable revenue, that somehow we will find a way out?
There is no way we can grow our way out of these problems. We would have to grow at double-digit, real GDP growth for decades in order to close the gap that we currently face, absent reforms. We haven't grown at that rate in modern times, and we are not going to grow at that rate.
There are a couple of proposals out there now to establish a bipartisan commission that would suggest changes, very specific changes, which the Congress would then have to vote on as a package without amendments. This would sort of end-run the political process, and give people a bit of political cover. Do you think that is a good idea?
I do believe it is a good idea to form some type of capable, credible and bipartisan commission or task force. And in my view, at a minimum, any such commission or task force would have to address the need to reimpose tough budget controls, to engage in comprehensive Social Security reform, to engage in round one of comprehensive tax reform, and to engage in round one of comprehensive health-care reform. If Congress were able to act and the president was willing to sign a package that included those four elements, it would likely result in a significant down payment in our large growing fiscal imbalance.
It seems like an awful lot to take on all at once.
In some ways, you are better off to have more to deal with than less because you have more of an opportunity for tradeoffs.
But health-care reform, for instance?
Well, round one. You know, in my view, one of the things we are going to have to do in this country is something we have never done before. We have never had a national discussion and debate over what type of health care is in our broad-based national and societal interest to [provide for] every American. We actually have very perverse incentives in our system right now.
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Member Comments
Posted By: whaleback1 @ 04/12/2008 3:04:59 AM
Comment: The problem with the US is, every time we talk about health care and education, people immediately change the subject, and begin to talk about defense, tax breaks of the big companies, social injustice, people out of work, poor single mothers, etc. etc. I think that is because our education is so bad. Most people have lost the ability to reason. Is it a wonder why we've been discussing health care and education for as long as I know (30 years), and they are only getting worse everyday?
Here is something to think about. Even we abolish all the defense, the saving will not be enough to finance our medicare, because the expense of the latter would just grow even bigger, like a well-fed monster. Before we talk about allocation of the tax dollars, we need to talk about cost containment. Mr. Walker is correct. Our current medicare basically issues blank checks. And no amount of money will be enough to cover the blank checks.
I agree with EVERYTHING Mr. Walker said. (By the way, he is a good speaker. A lot of fun to listen to.) Medicare premium must be based on risk factor - these are insurance programs. Not social welfare. People have the incentive to avoid auto accidents because they will raise their permium. Illness should raise premium too so people will have incenvtive to avoid illness. I know. No one wants to be sick. But how many people think about diebetis, heart disease when they eat pizza, steaks, chips and sit as cough potato?
I believe in government managed health care facilities like the VA for those who do not have the money to pay for private health care, or for those who just need basic care (like me. I have a decent income. But I maintain good health. So I don't need expensive health care. Actually, at 60, I never got sick.) We do not have unlimited resources to pay for expensive procedures, like by-ass surgueries for everyone. If a person is already 65, and is in poor health. Why does he need a bypass sugery anyway? If he can pay for it with his own money, he should by all means get it. But I, as a tax payer, much prefer using that amount to cover basic health care for many younger people. In other words, I believe in rationing, which is what they do in Canada and Europe.
Americans are so spoiled. When it comes to health care, we believe sky is the limit. We want the best things money can buy. Is it not a wonder why the US healthcare providers has given us the most expensive service in the world? The policians now are talking about high quality, lost cost health care. Give me a break. If Cadillac was cheap, people would not want Cadillac any more!
Posted By: claudioscaduto @ 12/04/2007 3:01:14 PM
Comment: i am an american and european..of course we have a big problem in this country and not only on fiscality
it is really very sad that mr. walker do not recognize that social security and national health care in europe and specially in france has been working for ever and it is still working very well..and the euro is strong and the dollar is weak ..how mr. walker explain those facts. if i were him or anybody out there i just would copy anything ..anywhere that works..and the national heath care in france works very very well..but we americans
prefer to bomb iraq,,or maybe iran but we would not go down on the street and make a revolution for a better america and to force our politicians to do what we want once and for all
does mr. walker knows about the front populaire when all the french population made a revolution for a better life......
Posted By: saadasim @ 11/27/2007 11:59:19 PM
Comment: Hey someone has to pay for an imperial war to benfit oil companoes, war profiteers and Israel.