The nation’s real fiscal problem is that government can never roll back the $16 trillion debt without reforming entitlement programs such as Medicare, Social Security and Medicaid. So far, Washington has merely tweaked them, not put them on a more sustainable financial path.
The deadly concoction of rising health costs and millions of retiring baby boomers will keep escalating the expenses of Medicare and Medicaid. Those costs will keep the debt on a dangerous upward trajectory, regardless of the automatic spending cuts, a continuing budget resolution or a down payment on the debt through higher taxes, some domestic cuts and less interest on the debt.
These incremental steps are only temporary fixes. Before the sequester went into effect last week, GOP Sen. Rob Portman of Ohio rightly said that we should be talking less about the automatic cuts and more about underlying comprehensive spending and tax reforms.
Yes, tax reform is key to the conversation. That’s one way to raise revenues — close loopholes while lowering some tax rates. A tax overhaul could create greater economic certainty and spur growth.
So the debate Washington needs is over tax and entitlement reforms.
Believe it or not, there is some consensus. Senate Finance Committee Chairman Max Baucus, a Democrat, and House Ways and Means Committee Chairman Dave Camp, a Republican, both want to broaden the tax base and lower tax rates. Responsible members in each party know it’s impossible to deal with spending issues without adopting such entitlement reforms as increasing the retirement age for future recipients.
The problem is that this discussion is not happening on a large enough scale to make a difference.
Portman told us that the next necessary step is for the Senate’s top leaders, including chairs of the Finance Committee and other relevant panels, to set a time frame for dealing with tax and entitlement reforms. Otherwise, the next thing you know, it will be autumn and the parties will start posturing for the 2014 elections.
We agree. The focus on spending reforms, including increasing Medicare premiums for future recipients, should be central because tax increases have already been secured as part of the fiscal cliff package.
We also worry that setting a new timeline will lead to Washington letting another opportunity slip away.
This is where every voter comes into play. Like parents of wayward children, Americans need to keep reminding lawmakers to stay on task. Then, and only then, will the country move beyond the smokescreens.