Medicare reform

What Sort of Entitlement Reform Would Republicans Trade for Higher Tax Rates?

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The Washington Post reports that "a growing chorus" of Republicans have urged GOP leaders in the House to accept higher tax rates on high earners — provided that they are paired with some form of entitlment reform.

The idea, the piece explains, is to use the leverage created by the fiscal cliff and the expiration of the Bush-era income tax cuts, to negotiate for changes that would hold down spending in our ever-more-expensive entitlement system:

Many GOP centrists and some conservatives are calling on House Speaker John A. Boehner (R-Ohio) to concede on rates now, while he still has some leverage to demand something in return. Republicans are eager to win changes to fast-growing safety-net programs, such as raising the eligibility age for Medicare and applying a less-generous measure of inflation to Social Security benefits.

After Dec. 31, tax rates for most Americans, including the wealthy, are set to automatically rise, and this could cost Republicans a key bargaining chip in winning changes to entitlements.

So what sort of trade would this chorus of Republicans consider? It's somewhat difficult to tell from the GOP officials quoted in the piece:

"I and some others are advocating giving the president what he wants," said Rep. Steven C. LaTourette (R-Ohio). But he stressed that this must be part of a package that slows federal borrowing and reduces the debt by $4 trillion to $5 trillion.

"Quite frankly, some people in this 2 percent who call me, they're more worried about the fiscal cliff than about the rates going up a couple points. That has bigger risk for them," said LaTourette, a close Boehner ally who is retiring in January.

Rep. Thomas J. Rooney (R-Fla.) added: "If there are truly real entitlement reforms that are going to preserve Social Security and Medicare for generations to come, it's going to be very difficult for me to oppose" higher rates for the rich.

"Truly real entitlement reforms" are better than probably imaginary entitlement reforms, I guess. But what would count as "truly real?" The report suggests that raising Medicare's retirement age might be a possibility, but doesn't mention any other big changes to Medicare, the single biggest long-term driver of the debt. Raising the retirement age is a good idea, but it wouldn't save that much money. The Congressional Budget Office says it would save about $125 billion over the next decade. That's something, but in the context of $1 trillion deficits and $16 trillion and debt, it's hardly a debt-reduction game changer. Medicare itself is on track to spend roughly $1 trillion a year by the next decade. Yes, there would be bigger savings down the road, but even then the impact of raising Medicare eligibility age is fairly limited because the highest cost beneficiaries are the oldest. Raising the retirement sounds drastic and therefore serious to some because it affects a lot of people over the long term. But fiscally, removing the youngest and healthiest age cohort from the system is small potatoes, and probably shouldn't qualify as a "truly real entitlement reform." 

NEXT: One-Party Control of 37 States Leaves Politicians To Rein In Their Own Allies

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  1. Why kind of entitlement reform? The unspecified, in the future type.

  2. That is a great question. Only immediate cuts are real cuts.

    I am on record for a $50 co-pay for every doctor visit to discourage superfluous trips to the office. That would really reduce Medicare costs.

    But the riff-raff here think I am a bleeding heart…

    1. I think you’re a partisan demented dipshit.

    2. You make it sound like the reason Medicare costs so much is because the elderly go to the doctors office every time they stub their toe.

      2nd, $50? I spend that much every time i go to the doctor. If your going to give a penalizing co-pay then at least make it sting a bit.

    3. On what record? Because the only thing you ever say here is “BUT BOOOOSH!”

    4. $50 is nothing.

    5. Same for Medicaid too right?

  3. What Sort of Entitlement Reform Would Republicans Trade for Higher Tax Rates?

    None.

  4. I’d like to see reform of the cheap capital gains tax rate entitlement.

    1. According to Tony, not taking = giving. At least he’s being honest for once. Oh, no, can’t even give him that much credit, he’s misusing the word “entitlement.”

      1. The tax rate really ought to treat all forms of income equally.

        Why are we penalizing wage earners?

        You make $250,000/year at a JOB and you pay 38%, but if you make it trading stocks you pay 15%. How is that fair?

        Raise the capital gains tax and the tax on dividends, while cutting the corporate tax rate and allowing corporations to expense dividends to prevent double taxation. You’ll immediately see the stock market shift to more stable-valued dividend paying stocks and fewer stock price bubbles, AND you can then lower the rates on wages earners to the same level as capital gains taxes.

        1. yep
          and we should all join the
          “fuck you, cut spending”
          crusade

        2. I’m going to quote you NY times style:

          “You make $250,000/year and you pay 38%. How is that fair? Raise the capital gains tax and the tax on dividends.”

        3. How about lower the income tax rate to 15%, and make it flat for all forms of income?

        4. You make $250,000/year at a JOB and you pay 38%, but if you make it trading stocks you pay 15%. How is that fair?

          That’s why you are in favor of lowering the taxes on wages right?

        5. Hazel

          Suppose I bought exxon in 2008 when it was $85. If I sold today at $88, you want me to pay 38% on a paper profit which is a loss after inflation.

          How is that fair?

        6. “You make $250,000/year at a JOB and you pay 38%, but if you make it trading stocks you pay 15%. How is that fair?”

          Because you don’t generally lose money working at a job? Now, if the income tax was recalculated each year as something normalized over all years (such that a huge loss in one year would reduce taxes for many years to come), there would be no need for a separate rate. That would also be a boon to young people, seasonal workers, doctors, etc., and would serve as a sort of minor social security program since retirees would see their lifetime average income continue dropping each year, possibly into lower brackets.

        7. You make $250,000/year at a JOB and you pay 38%, but if you make it trading stocks you pay 15%. How is that fair?

          If you’re trading stocks you’ve held for less than 1 year, which is typical of the caricature of the high-flying Wall Street whiz kid day trading his way to millions, you pay the ordinary income tax rate on your earnings – capital gains and dividend taxes are levied on securities held for over 1 year to reflect the fact that the value of the security or the amount of the dividend was already affected by the corporate income tax paid by the underlying entity in which the security was purchased. I’ve explained this to you right here in the Reason comments several times, so you don’t have ignorance as an excuse. You need to reformulate this canard – as-is it’s a non-sequitur.

          Oh, also, trading stocks is kind of like a JOB.

    2. T o n y| 12.6.12 @ 5:07PM |#
      ‘I’d like to see up = down’
      Got it, shithead.

  5. Aren’t all of these cocksuckers going on vacation for the rest of the month? So nothing’s happening until January anyway.

    On a side note, why are u.e. benes ending on Dec. 30, but nothing’s happening to foodstamps, disability, welfare checks, etc.?

    1. “Aren’t all of these cocksuckers going on vacation for the rest of the month? So nothing’s happening until January anyway.”

      Consider this a blessing.

    2. cigar smokers AND rug munchers.

      1. More like rug smokers and cigar munchers…

  6. The fundamental problem with Medicare is that it’s an open-ended commitment to pay for people’s medical care at just the moment when they probably want and need to spend $infinity to stay alive.

    As a society, it’s just crazy to promise to pay for a price inelastic good that people have an effectively insatiable demand for.

    Any “real” entitlement reform has to deal with that fact.
    The beauty of the Ryan plan is precisely that it DOES limit the amount the government is willing to pay – it gives seniors $X to buy private insurance, and if that isn’t enough they can spend out of pocket. And you can then set X according to what the Medicare program can afford to pay.

    1. That’s exactly the direction we need to be going. Also, if you don’t spend all of $X, you keep the difference.

      I’m not praising Ryan’s plan per se – just that the concept you outlined is so simple and full of common sense, yet all anybody hears is that you want to kill grandma.

    2. “The beauty of the Ryan plan is precisely that it DOES limit the amount the government is willing to pay – it gives seniors $X to buy private insurance, and if that isn’t enough they can spend out of pocket.” And if they don’t have the money? Come on, say it, you glibertarian fuck. They die. SAY IT.

      1. Ah, so you imagine a world with no charity or physicians who refuse to work pro bono? Thats not a world I am familiar with. Even if your vision were to hold, are you implying life is truly priceless? If science could extend the life of every person on Medicare by 12 months but at the cost of $10B each, should we do it? How much health care will the federal government buy when it has to declare bankruptcy?

      2. They die, sure. They’ll die regardless, unless they’re personally loaded and don’t mind shafting their descendants.

        With insurance, the company will spend a certain amount, and then give up. With cash payment, the family will figure out whether they will get any benefit for what they’re paying — it will be a painful decision, but at least there will be genuine concern behind it. Socialized insurance won’t have anything to pay for, because it won’t pay doctors what it costs to treat them. Socialized healthcare will decide that their lives aren’t worth saving, and will seal the deal by denying them food or water until they definitely die.

      3. What happens when the IPAB decides the $200,000 a month cancer treatments aren’t effective on cost-benefit basis and refuse to pay for it? Come on, say it, you statist fuck. They die. SAY IT.

        1. You can ration things via prices in a market, where you retain the decision making power. Or you can ration things via queues and price controls. Either way, if cost exceeds benefit, you die.

      4. Nobody gets out alive.

      5. They die.

        Because granny will never, ever die as long as we pump enough money into her.

        Is that right dishpit?

    3. The fundamental problem with Medicare is that it’s an open-ended commitment to pay for people’s medical care at just the moment when they probably want and need to spend $infinity to stay alive.

      As a society, it’s just crazy to promise to pay for a price inelastic good that people have an effectively insatiable demand for.

      You nailed it right there. All the dickering over the details isn’t going to change the fact that you are trying to figure out how to make 2+2=5. You can tweak and jigger and modify all you want, but when the baby boomers start retiring and lining up for their triple-bypass surgeries and hip replacements and kidney transplants all the entitlement reform in the world isn’t going to change the fact that it just isn’t mathenatically possible to pay for everything everybody wants.

      One way or another, most of us are going to die for lack of medical treatment. The only questions are: who gets to decide when the medical treatment stops, and who pays for the medical treatment up to that point.

  7. The problem is that simply raising the retirement age doesn’t really constitute an impactful reform, certainly not worth conceding tax increases. I actually consider this “reform” to be a negative since we should be doing our best to at least return to people what was stolen from them.

    The only real meaningful reform would be to phase out the system completely, letting young people bow out of the whole thing entirely.

  8. Sometimes dude you jsut gotta run with it. Wow.

    http://www.IP-Hidden.tk

  9. They could at least try for a federalist approach, block granting federal medical dollars to the states.

    Anything that removes control and power from the Federal government is a good thing, and one that likely limits their desire to expand the programs, since they aren’t the ones who get to spend the money.

    Trade more taxes for a repeal of Obamacare and more federalism. Let’s see how Obama likes them apples.

    1. You should be the GOP strategist.

      1. That is a hateful thing to say. Even for you.

  10. Forget fiddling with the minimum age, let’s impose a maximum age. If you make it to 80, hope you enjoyed your life, because now you’re on your own.

    1. Actually not a bad plan.

      Use actuarial tables to determine when you should die based on how badly you fucked yourself up over the years and then cut them off once their clock is up. Beyond that point it’s a losing investment anyway.

  11. Pretty sure this article is guerrilla marketing for seasteading and free cities projects, by showing us what passes in modern politics for reasonable stewardship of our money.

    Would anybody really hire John Boehner or Barack Obama as financial advisors based on their zero years working in estate planning and asset management? Is there any evidence that Lindsay Graham or Chuck Schumer have the faintest idea how to evaluate insurance claims? Why does the reporting pretend that if you take several thousand people – politicians and their staff members – then confront them with a myriad of different politically-motivated plans crafted by think tanks and lobbyists, that they will come anywhere close to an optimal solution for the varying interests of 300 million people?

    GIGO. If you create a political system based on picking inoffensive egomaniacs with nice hair, why should you expect the system will make good governing decisions? Dedicated financial planners get it wrong all the time, to their own detriment, so there’s absolutely no reason to trust Congress will do any better. The only difference is that government is big and confusing enough to obfuscate who caused a given problem and powerful enough to steal money to cover up the resulting mess.

  12. I think the social wealth is need to average.

  13. I’ll tell you what I’d trade, and as a 1%er I’m talking with my wallet, literally.

    I’d accept having to pay higher taxes in exchange for entitlement reforms that…

    1. Slightly raise the retirement age.
    2. Partially “privatize” social security (like Chile, or Australia).
    3. Block grant medicaid to the states (which of course, would also necessarily tinker with obamacare, which is why our peacock in chief would never let it happen)

    These three reforms are so badly needed that, to me, their worth a little pain. I’ll take one for the team if it means we get these things.

  14. This sort of compromise is just what cost the GOP the 2006 and 2008 elections and all of us an additional 60% in national debt in less than four years. Otherwise, it might have been “only” 20 or 30%.

    The ruling duopoly is dangerous. Americans need to start considering their country ahead of themselves, before it’s too late.

  15. Too many people . . . not enough productivity.
    Just let them spend until reality smacks us all upside the head. I’ll survive.

  16. The only fair system is one that is voluntary. People need the choice of whether or not to participate in government programs that are ostensibly there for their benefit.

    Also, there must be a means test on Social Security. People who have plenty of money do not need old age welfare. It is simply a theft from poor people’s paychecks to rich people’s yacht payments without the necessary means test.

    Of course, it would be nice to get rid of all coercive programs entirely. But most people don’t understand the concept of consent when it comes to other human beings.

    1. Blasphemy! Don’t you know that the liberal ruling class, like all good parents, always knows what is best for you? They just want to help you get more out of Social Security then you put into it. In fact, they want EVERYONE to get more out of Social Security than they put into it! Anyone who thinks that is unsustainable is just a heartless, sadistic, psychopathic prick who gets a kick out of dangling cash above old people’s heads.

  17. http://www.usa.gov/directory/federal/index.shtml
    Congress should start here and cut it to the bone. Federal entitlement programs by the ton that produce nothing taxable yet all of them payed for by our taxes. Take your time reading through the listing from A – Z and you’ll run across many agencies you never heard of.

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