I just spent the last few minutes reading Geoff Colvin and Allan Sloan’s piece in the latest issue of Fortune (sorry, no link available yet).
The article started out promising in that it made it sound as though they actually had a solution for the economy. Instead, I was disappointed because there is no solution, only generalities (much like politicians give us day in and day out).
What do I mean?
Well, they start out by talking about how bad everything is right now and about how childish Washington politicians are. I agree with that.
Then, they move on to address how they would fix certain parts of the economy. The first of those is spending.
Social Security and Medicare
The biggest problem in dealing with Medicare is the endgamewhen people enter their final descent and are kept alive, expensively, often with no statistically significant chance of leading what most people would consider a decent or rewarding life.
I agree with that. It’s very awkward to talk about elder care. Their solutions:
We propose that if you want to use heroic measures to keep yourself or any other Medicare or Medicaid recipient alivewe’ll leave it to experts to define “heroic measures”either spend your own money or buy a supplemental end-of-life policy from the market that will doubtless spring up if our propsal is adopted.
Not sure I’m comfortable with “we’ll leave it to experts to define ‘heroic measures'” but I understand their point. At some point it’s time to let go.
I like this but wonder where they would draw the line:
We’d also surcharge smokers and the ultra-fat for their Medicare coverage.
Seems like we would eventually cross over into the nanny state. Smokers, ultra-fat, consumers of certain foods, etc. Seems scary to me.
They move on to talk about Social Security. This is where it starts getting vague.
The fixes are simple and obvious: Bring in more money by slightly adjusting the payroll tax, and change the benefit formula to reduce benefit growth over time to the highest-income beneficiaries. Social Security tax is levied only on salary income up to $110,100 (while Meidcare tax is levied on all salary income), and that wage base rises gradually over time. Let’s raise it a little faster while also edging up the reitrement age to keep pace with increasing life expectancies. That would do it.
Questions: How much? How fast? What age?
I won’t even get into why this idea of raising the income cap while lowering the benefit amount disgusts me so much.
They briefly address lowering defense spending before moving on to…
They use the phrase “Broaden the base and lower the rates” but they give NO DETAILS on how they would broaden the base and how they would lower the rates. One thing is for sure: their proposals would mean SIGNIFICANTLY INCREASED TAXES for my family. Why? Because they want to do away with…
• the exclusion for employer-sponsored health insurance
• the tax deduction for mortgage interest
• the tax deduction for state and local taxes and for charitable gifts
WOW! That would kill us.
I’m a reasonable person. If we want to do away with those things, fine. But, while we’re at it, why not just go with a FLAT TAX?
The authors don’t address welfare spending, which is unfortunate. Maybe that’s because this was a magazine article and not a book. Still, if I’m going to face higher taxes, I would like to see fewer people mooching off everyone else’s hard work.