Many Ideas But Little Agreement on Solving Debt Crisis

Published Jan 14, 2013. By Ledyard King.

 

WASHINGTON — Republican Sen. Marco Rubio wants the federal government to save money by freezing discretionary spending and reforming entitlement programs such as Social Security.

 Democratic Sen. Bill Nelson proposes ending subsidies to oil companies and letting Medicare negotiate prescription drug prices. 

 Republican Rep. Steve Southerland would consider charging wealthier beneficiaries more for Medicare services and cracking down on “waste, fraud and abuse.” 

 Ask Florida lawmakers how to rein in the federal debt and you’ll get myriad responses. What you won’t get is the broad, bipartisan consensus necessary for the government to avoid tens of billions in automatic spending cuts — half from defense programs — set to take effect March 1. 

 Recently approved legislation to temporarily avert the “fiscal cliff” extended income tax breaks for all but the wealthiest Americans. 

But it also delayed decisions on what to do about the size and scope of government. In many ways, making those tax cuts permanent complicated those decisions by further limiting what programs and services Washington can afford to deliver.

Experts who have studied ways to corral the federal government’s spiraling debt, now more than $16.4 trillion, say any long-term solution to tackling the debt must include revamping the five major entitlement programs (Social Security, Medicaid and the three Medicare programs).

Those programs make up about 40 percent of the budget — more than $1 trillion a year.

“We have to come to grips with the fact that the growth of the entitlement programs is driving the projected growth of debt,” said Robert Bixby, executive director of the non-partisan Concord Coalition. “It’s a matter of mathematics. Just look at the number of beneficiaries. Those programs are going to be much, much more expensive in the coming years.”

The automatic spending cuts that are set to take effect March 1 originally were to take effect Jan. 1 under the 2011 Budget Control Act. That law made the cuts — more than $1 trillion through 2021 — mandatory, unless Congress and the White House agreed on a less drastic debt-reduction plan first.

 

The fiscal cliff legislation that Congress approved on Jan. 1 delayed the cuts for two months.

 

 

Marc Goldwein, a senior policy director with the non-partisan Committee for a Responsible Federal Budget, said Congress has made important strides in spending and taxation.

The fiscal cliff compromise will balloon the deficit, but it also will raise more than $600 billion over the next decade by ending the Bush-era tax cuts for individuals earning more than $400,000 and families earning more than $450,000.

“The real money, particularly over the long run, has to come from the entitlement reforms,” said Goldwein, who served as associate director of the National Commission on Fiscal Responsibility and Reform. That panel, created by President Barack Obama, is informally known as the Simpson-Bowles Commission, after its co-chairmen.

Several proposals to make entitlement programs less costly have been floated, including raising the eligibility age for Social Security and Medicare, changing the way annual cost-of-living increases are calculated for Social Security recipients, making wealthier Medicare beneficiaries pay more for treatment, and turning Washington’s share of Medicaid into a block grant for states, which would better control federal costs.

“Until we address the largest driver of our debt — entitlements — any cuts we make will just be trimming around the edges,” said Southerland, R-Panama City. “Washington must get serious about saving Social Security and Medicare for future generations, and that begins with changing the way these cherished programs are funded.”

The proposals wouldn’t necessarily affect current Medicare and Social Security beneficiaries, but the mere suggestion of entitlement reform could be a hard sell in Florida, with its large elderly population.

Nearly 4 million of the country’s 56 million Social Security recipients live in the Sunshine State, including about 56,000 in the Tallahassee area, according to the Social Security Administration.

Of the nearly 50 million Medicare beneficiaries, more than 3.5 million live in Florida. Of the roughly 67 million Medicaid enrollees, more than 3.4 million live in the state.

 

Reforming entitlements only addresses future debt since many of the reforms wouldn’t take effect for years. Many liberals, who want to protect those programs, are pushing instead to eliminate tax deductions that cost the federal government more than $1 trillion each year.

Cutting Social Security, Medicare and Medicaid, which disproportionately help low-income Americans, while maintaining tax breaks that generally favor middle- and upper-income citizens would be “highly regressive,” according to Robert Greenstein, founder and president of the left-leaning Center for Budget and Policy Priorities.

Nelson, D-Orlando, doesn’t support wholesale entitlement change.

“Sen. Nelson has said all along he doesn’t think we need to cut Social Security. It’s not the problem,” the senator’s spokesman, Dan McLaughlin, said. “As for Medicare, he believes we need to look at further reducing fraud in the system that’s still costing billions of dollars annually.”

Nelson also wants to let Medicare negotiate prescription drug prices, as the Veterans Affairs Department does. Simply requiring manufacturers to pay a rebate on drugs for low-income Medicare beneficiaries could save $112 billion over 10 years, McLaughlin said.

Republicans want to fundamentally change entitlement programs, which they say is necessary to save them.

Rubio, R-West Miami, supports raising the Social Security retirement age for people now under 55.

Southerland wants to at least look at tying someone’s wealth to the cost of the Medicare services they get.

Members, including Southerland, often talk about eliminating government programs that appear wasteful, redundant or prone to fraud as a logical first step to fixing the deficit. But that really would have little effect on the debt, experts said.

“It would be irresponsible to ignore that low-hanging fruit,” said Rep. Bill Posey, a Republican who represents Florida’s Space Coast.

But reducing government waste, though popular, wouldn’t have much effect on the debt, experts said.

“We’re not solving this deficit problem just with waste, fraud and abuse,” Goldwein said.

Bixby agreed.

“It’s not the waste, fraud and abuse (causing the debt). It’s not even the war spending,” he said. “You just look at programs like Social Security and Medicare and count the numbers of beneficiaries.”