Felicia Muftic: A better time to make changes – in a year or two
February 21, 2012
Forget Congress. Forget the President’s 2013 budget. Forget the deficit: Except for extending the payroll tax holiday, nothing much is going to happen in Washington until after the November elections. Congress will just be too busy posturing and pandering.
That is not all bad because what the Obama administration has been doing to improve the economy seems to be working. The better time to make changes will be in a year or two when our economic recovery is more secure and could survive any extreme or inappropriate attempt to fix the debt problem. About 40 percent of the deficit was caused by the 2008 crash and could be cured by recovery. Social Security and Medicare will not go broke this year or in the near future.
To avoid nasty surprises, we should demand that contenders for president be more specific about their post-November 2012 plans for the remaining deficit. The question is: Which party has the better proposal to reduce the deficit that also causes the least pain and collateral damage?
There is already a plan on the table that does make sense. The Simpson Bowles Deficit Reduction Commission report was serious, comprehensive, and fact-based.
A case can be made that the Obama administration is more likely to enact Simpson Bowles because it has already enacted or proposed a large number of Simpson Bowles recommendations, while the GOP has proposed and voted for some unpopular alternatives and has outright opposed others.
One Simpson Bowles proposal was to cut defense spending, and Obama has implemented much and plans more. The GOP, especially Mitt Romney, favors spending even more on defense.
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Simpson Bowles recommended continuing Obamacare to reduce the deficit. Yes, their conclusion was that there are net cost savings (and not the fictional additional trillion dollars of costs the GOP wrongly pins on health care reform).
The GOP has no proposal to replace Obamacare other than to shove health care solutions and expense to the states to do as they will. Leaving health care to the free market, as the GOP often proposes, is a farce. There is no free market: Insurers are exempt from anti-trust action, free to collude to set prices and coverage.
Unlike Obamacare, the GOP offers no requirement to cover pre-existing conditions or to insure the 30 million uninsured, or to provide for everyone no co-pays for annual physicals, mammograms, and now maybe not even requiring inclusion of contraceptives. Those without insurance would still go insurance-naked, visiting the ER only when they got so sick they required expensive treatment, and passing their unpaid bills onto the rest of us in the form of increasingly unaffordable higher premiums. GOP plans contain no checks on health care costs to us or to the Medicare and Medicaid system, either.
Simpson Bowles concluded that tax fairness was needed and the deficit could not be reduced without raising taxes and letting Bush tax cuts expire, with which Obama agreed. The GOP could not stomach any of that and they proposed to increase the unfairness with more tax breaks for the rich, relying solely on cuts to social programs. Obama has also proposed a millionaires’ tax, further getting the fairness part right.
Simpson Bowles recommended cutting $2.5 of government expenses for every dollar of tax increases. Obama has supported similar ratios, depending upon what is included in the calculations, but he has consistently supported more dollar-for-dollar cuts than tax increases.
Those who have the most at stake are the future seniors. Both political parties have fumbled or became MIA on solutions to keep Medicare and Social Security viable. A sensible recommendation made by Simpson Bowles was gradually to raise the retirement age to 70. That is far less painful than GOP plans: eliminating the “security” in Social Security by gambling retirement on Wall Street with no safety net to cover failed investments, and/or requiring $6,000 in annual Medicare co-pays.
For more commentary, go to http://www.mufticforum.com
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