The sequester is upon us! We somehow dodged the rapture (twice now if I recall correctly) and the Mayan Apocalypse, but we did technically fall over the fiscal cliff. Will we avoid the sequester? Probably not. As a result the country will be subject to disastrous spending cuts at a time when we least need them. That this will happen represents the complete and abject failure of our political system. Our politicians came up with a package of cuts so abhorrent it would force them into enacting policy, and lo and behold, we failed to act. We know we've hit the nadir of political activity when the people we elect to fix our problems just create more of them. The sequester is an embarrassment, a word I use too often - but do not misuse - to describe our political system.
What could we do? Neither side is willing to back down here. The new breed of Republicans wants spending cuts no matter what, even if they're misapplied and trivial. They're right that we need cuts, but not in the manner they envision - in fact in a manner fundamentally different from what they envision. If we really want to fix our structural spending issues we need to address entitlement reform and military spending. I'll shelve military spending for now and focus on entitlement spending, though I do think there are substantial and significant areas in which we can reform defense spending to make it more efficient and still make sure that our military is the world's most advanced and well-prepared for the potential challenges we face.
On to Medicare and Social Security - and let me be clear here, the Democratic hands-off approach to these entitlement programs is unacceptable, we need to reform them both - there are things we can start experimenting with that might be suitable areas of compromise.
For starters we should acknowledge that both of these programs allocate money to seniors regardless of need. Why? That seems silly. What if you don't need Medicare or Social Security benefits? Couldn't we find a way to start means-testing these things on the affluent elderly? Democrats are loathe to raise the retirement and Medicare eligibility (I disagree with this), but they make a strong case that for the people who need benefits most haven't benefited from the increased standard of living and therefore longer life spans of the more affluent. Fair enough, so why not raise the retirement and Medicare eligibility age for people making more than $X? This could be phased in slowly with the age rising slowly until a cap was reached.
This step alone would save both programs money, but it represents something more important: a smart investment. The answer to our spending problems isn't to simply cut spending, it's to invest wisely. Spending government money on people who don't need it isn't a smart investment. Perhaps one views this as punishing success, but it hardly seems like punishment to deny people resources they don't need. Compare the idea of giving the affluent less in terms of social security and Medicare benefits with taking more from them via higher taxes. Which is more appealing? What about adjusting cost-of-living benefits for those who make more money?
What if I take this to a crazy extreme, but one that makes sense to me, what if we make Medicare an emergency insurance provider to people whose income exceeds $X? The conservative ideology around taxes works something like this: people who pay less in taxes, and therefore have more to spend, are more likely to use their money to grow the economy either through investment or through spending. I agree with this, but that same level of confidence and security doesn't come only through taxes, it comes through knowing you have insurance as well. So what if we make Medicare emergency insurance? Right now my mother, who is retired, can have a check up at her doctor covered by Medicare. That's great except that she can afford that on her own or through a private plan. However if she were to develop a serious medical condition that wouldn't be the case. If we make Medicare emergency insurance covering all major medical issues costing over $X then we put the onus on individuals to maintain healthy lifestyles and cover the cost of minor issues while establishing a safety net that acknowledges that sometimes disasters happen and we want to provide the necessary level of support for our fellow Americans in time of dire need.
These are just some ideas for fixing our long-term, structural issues. There are many more being proposed by people who are far more knowledgeable than I am, but we must begin a trial and error approach to reforming our entitlements if we are going to get our finances in order over the long term. I would hope ideas such as these could help Democrats and Republicans find some common ground on significant spending cuts that would actually help allay some of our long-term budget issues and let us avoid the looming, arbitrary, and potentially devastating cuts included in the sequester.
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