The Congressional Budget Office found
that the U.S. will amass roughly $4 trillion in deficit over the next
decade if current spending levels remain in place. Even with a drawdown
of American troops in Afghanistan, the Committee for a Responsible Federal Budget estimates that the U.S. debt will remain at 79 percent of GDP through 2022.
Democrats, of course, can and should call for deep cuts in defense
spending. But they must recognize the need to reform Medicare, the
country's fastest growing government program. The rise in health care
costs is the single largest fiscal threat the government faces. McSweeney's and The New York Times, two publications embraced by the left, have both published prescient pieces on the vast scope of the problem.
Ezekiel J. Emanuel, a professor and health care expert at the
University of Pennsylvania, and the older brother of Democratic Chicago
Mayor Rahm Emanuel, starkly summed up the problem in the Times in May.
"By 2025, tax revenue will be able to pay for Medicare, Medicaid,
Social Security, interest on the debt and nothing else," Emanuel wrote.
"The rest -- defense, medical research, highways, education, energy --
will have to be financed by deficits. Social Security's funding is
predicted to run short in 2033, Medicare's trust fund in 2024."
Emanuel called for "graduated eligibility," a reform that would
result in wealthier people receiving Medicare and Social Security later
in life. The reform reflects the reality that the rich outlive the poor.
"People in the bottom half of the lifetime earnings distribution
would become eligible for normal retirement benefits at age 65 for
Medicare and 66 for Social Security, just as they are today," Emanuel
wrote. "But people in the next quarter of the lifetime earnings
distribution would become eligible for the respective programs at 67 and
68, and those in the top quarter would become eligible at 70 and 71.
All eligibility ages would increase over time, as they are scheduled to
This is just one proposal that should be considered by Democrats.
Over the long term, a refusal by the left to embrace any type of major
reforms to Medicare and Social Security is fiscal and political suicide.
At the same time, Republicans should embrace the need for corporate
tax reforms that increase revenues, not decrease them. One of the worst
aspects of the "fiscal cliff" compromise was that, yet again, corporate
Congress ended a 2 percent payroll tax holiday that helped middle class Americans but extended $46.1 billion
in tax breaks and credits for American corporations. That includes a
$78 million subsidy to NASCAR for racetrack construction over the next
10 years. Separately, the wind industry gained a whopping $12 billion
over the next decade.
The biggest problem, though, is a corporate tax system that allows
companies to avoid vast amounts of taxes by hiding profits overseas. In
an excellent piece
in Quartz Thursday morning, Tim Fernholz argued that there was a larger
reason CEOs embraced higher income taxes for wealthy Americans in
recent White House meetings: the promise of corporate tax reform. Two
vast tax breaks that CEOs wanted as part of corporate tax reform,
according to Fernholz, were in this week's final deal.