There is no threat to our nation’s fiscal health greater than the coming deficits from unrestrained growth in Social Security, Medicare, and Medicaid. Already Social Security and Medicare consume 7.5% of our GDP. Unless changes are made that figure will jump to 13% by 2030.
Bravely stepping in to offer a policy solution, Rep. Paul Ryan (R-WI) has introduced a plan he calls “A Roadmap for America’s Future.” The four major components of the plan, outlined in today’s Wall Street Journal, include:
- Health Insurance. The bill provides universal access to affordable health insurance, by shifting the ownership of health coverage from the government and employers to individuals. It provides a refundable tax credit – $2,500 for individuals and $5,000 for families – to purchase coverage.
- Medicaid and Medicare. The bill modernizes Medicaid by giving states maximum flexibility to tailor their Medicaid programs to the specific needs of their populations. It also allows Medicaid recipients to avail themselves of the health-coverage options open to everyone else through the tax-credit option.
- Social Security. Workers under 55 will have the option of investing over one-third of their current Social Security taxes into personal retirement accounts. These personal accounts are likely to grow faster than the traditional benefit. They are also the property of the individual, and are thus fully inheritable. The bill includes a guarantee that no one’s total Social Security benefits from the personal accounts will be less than if he had chosen to say in the current system.
- Tax Reform. The bill first of all offers individuals a choice of how to pay their taxes – either through the existing law, or through a simplified code with a tax return that fits on a postcard … The rates in the simplified code are 10% on income up to $100,000 for joint filers ($50,000 for single filers); and 25% on taxable income above these amounts. … On the business side, the bill gets rid of our uncompetitive corporate tax – currently the second highest in the industrialized world – and replaces it with a business consumption tax of 8.5%, which is half the average industrialized world rate.
While not necessarily embracing every item in his package, this is a serious reform proposal to address the surging middle-class entitlements that threaten our children’s economic future. Congressman Ryan has offered a long-term solution that avoids tax increases. The Heritage Foundation has offered proposals along similar lines. We challenge those who disagree with his approach to offer their own long-term solution.