This past week, the House of Representatives adopted a budget by a vote of 235 to 193 without a single Democrat voting in the affirmative.
According to the April 17 New York Times, “The Republican plan put forward by Representative Paul Ryan, Republican of Wisconsin, the chairman of the Budget Committee, and adopted by the House on Friday as its policy blueprint for the next decade, contains a substantial dose of deficit reduction but is really a manifesto for limited government.”
The Republican vision of our future is ridiculed by President Barack Obama, whose press secretary Jay Carney said after the vote, “The president agrees with House Republicans that we must reduce our deficit and put our country on a fiscally sound path, but we disagree with their approach. The House Republican plan places the burden of debt reduction on those who can least afford it, ends Medicare as we know it, and doubles healthcare costs for seniors in order to pay for more than a trillion dollars in tax cuts for millionaires and billionaires.”
I believe the Republicans’ desire to reduce the costs of major entitlements impacting on the budget is commendable, but their methodology is condemnable.
That there have to be changes in the programs to make them solvent for many years to come, is agreed to by almost everyone. The differences in opinion relate to how to accomplish the goals with the least adverse impact on the beneficiaries.
The Republican approach, as I see it, is to simply shift the cost of Medicare, Medicaid, and Social Security totally from government to beneficiaries. The Democratic approach, in my judgment, is more balanced and equitable, including expense reduction and revenue increases.
Medicare, now financed by a payroll tax and deemed financially sound until 2026, does have to be financially restructured. The Republicans’ approach is to overhaul the program so that it no longer provides free healthcare coverage to the elderly.
Instead, it would merely pay beneficiaries $6,400 annually (with an escalator that does not use health inflation as its base for increase) to be used to purchase a healthcare insurance policy.
Estimates of the expected actual cost for such a policy a few years hence are double that — perhaps $12,000 or more — and the elderly beneficiaries become responsible for the difference.
Many people believe, certainly the Democratic Party does, that this is cruel and a non-starter. That the Republican plan does not go into effect for a number of years until those now 55 become eligible does not make it more palatable.
The Republican approach to Medicaid provides block grants to states, limiting the federal government’s exposure. There are 50 million Americans without private medical insurance, most of whom receive medical coverage through Medicaid or are non-payers at hospital emergency rooms.
Medicaid coverage, instead of being reduced or eliminated, needs to be expanded and made uniform. The current system allows each state to make its own rules on the coverage that is available. According to The Public Policy Institute, New York’s “costs for Medicaid are well over twice the national average.”
As we know from the Bush administration, the Republicans want to privatize Social Security. This could be disastrous, as it would put beneficiaries and their retirement funds at the vagaries of the stock market.
In the upcoming election in 2012, the Republicans have given the Democrats a powerful weapon that will cause Democrats and independents, heretofore dissatisfied with President Obama and the Democratic Congress (now limited to the Senate), to close ranks and rush to the polls to save these programs from the Republican onslaught.
The Republicans have removed from budgetary discussion any references to imposing higher taxes on the top two percent of taxpayers who received huge reductions in their personal income tax rates during the Bush administration. Those reductions were recently foolishly extended by agreement between Republicans and President Obama which the president has now stated he will not renew.
I concur with President Obama that 2 percent of the country representing those making $300,000 or more annually should bear some more of the burden and pain, when we are asking the poor and middle class to agree to a reduction in the benefits currently received by them.
The gap between the middle class and the wealthy widens each year. The wealthy with all of the loopholes created for them by a compliant Congress don’t even pay the IRS rates corresponding to their income brackets.
Warren Buffet has said his actual tax rate because of loopholes is 17.7 percent.
Congressman Paul Ryan has done America a great service by putting in writing what his Republican Party stands for. He has handed the Democrats the very campaign document they can use to achieve an overwhelming comeback victory in 2012.
Let me also suggest some additional revenue enhancements that would lessen the need to reduce funding for programs such as education, transportation, and research that President Obama favors, along with the major entitlements of Medicare, Social Security, and Medicaid.
If there were a reversal on the issue of Medicare being allowed to seek volume discount for prescription drugs, and only a 30 percent volume discount was achieved, the government would save at least a trillion dollars over 10 years.
President Obama in a reversal of position now favors providing Medicare with the authority to use volume discounts in purchasing prescription drugs, stating in his response to the Paul Ryan budget, “We will cut spending on prescription drugs by using Medicare’s purchasing power.”
If loopholes now in the tax code which currently allow some very profitable corporations to pay little or no taxes were to be eliminated (my reference in particular is to the oil and energy companies), with Exxon, our most financially successful corporation paying no taxes, another trillion over 10 years could easily be available.
The entire tax code should be rewritten and all loopholes designed to avoid taxes obtained by the wealthy and privileged, including the oil and agriculture industries, should be eliminated.
Finally, a totally new suggestion: Congress should impose a stock transfer tax similar to that which New York City imposed until the stock exchanges threatened to move out of the state.
Such tax imposed by the Congress could not be threatened by a move-out. The long arm of the IRS could follow American companies wherever they flee. A stock transfer tax could easily provide another trillion. So at this point, we would have $3 trillion to pay down the debt in addition to responsible reductions in operating costs.
If there is a will, it can be done.
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