Tennessee Republican Senators Lamar Alexander and Bob Corker said today "all the talk is about taxes, but when the dust settles, federal income taxes will not increase for almost all Americans next year."
They urged enactment of their plan "focused on helping Americans avoid falling off the fiscal cliff no one wants to talk about, the looming bankruptcy of Medicare." The "Corker-Alexander Dollar-for-Dollar Plan" would reduce the growth of entitlement spending (Medicare, Medicaid and Social Security) by nearly $1 trillion in order to improve the programs' solvency. In exchange, Congress would approve the president's expected request for a $1 trillion increase in the debt ceiling.
"Millions of Americans are counting the days until they are eligible for Medicare. It would be tragic if Medicare were bankrupt when that day comes," the senators said.
That day will come in 11 years, according to the latest Medicare Trustees report, which says that in 2024, Medicare won't be able to pay all its benefits. When the Hospital Insurance Trust Fund is exhausted, the Trustees estimate that revenues into the program will only be sufficient to cover 87 percent of costs.
"Medicare can't survive when the average working couple retiring at age 65 continues to receive $3 in benefits for every $1 they pay into the program during their lifetimes," the senators said, citing statistics from the Urban Institute. On October 5, the Urban Institute reported that an average married working couple will contribute about $122,000 in payroll taxes to Medicare over their lifetimes and consume about $387,000 in Medicare benefits.
"It is dishonest for Washington to cover up the true cost of the government services it delivers. No one wants to talk about this. But unless we act, at some point these programs will go bankrupt and services will disappear. The first victims of this Medicare fiscal cliff -- the fiscal cliff no one in Washington wants to talk about-- are older Americans, millions of whom have no other way to pay their medical bills. The second victims are younger Americans who expect us to solve our fiscal issues so they aren't saddled with debt."
"It would be a colossal failure of leadership if the president does not now take advantage of proposals such as ours. There are 535 of us in Congress with ideas, but there is only one president. The president needs to do as good a job rescuing seniors in danger of falling off the Medicare fiscal cliff as he has persuading Americans that Congress should raise taxes on the rich."
To provide more certainty to help the economy grow, the senators' proposal also anticipates the president's expected request to raise the debt ceiling by $1 trillion -- an amount equal to their proposed nearly $1 trillion reduction in the growth of entitlement spending. "Legislative language for our plan is public and is ready for Congress to act upon," they said.
The "Dollar for Dollar Act," S. 3673, introduced by Corker on December 12 and co-sponsored by Alexander, contains provisions recommended by President Obama's Debt Commission (Simpson-Bowles) as well as by former Republican Senator Pete Domenici and Alice Rivlin, budget director for former President Clinton. The plan, which would allow seniors to continue to choose traditional Medicare among several options, would:
*Structurally reform Medicare, keeping traditional Medicare in place and competing side-by-side with private options so that seniors can choose the health care plan that works best for them. Significantly reduce costs without capping spending while preserving for seniors the choice of participating in traditional Medicare;
*Give states more flexibility to manage their Medicaid programs and prevent states from using so-called "bed taxes" to get more money from the federal government;
*Reform Social Security and gradually raise the retirement age so that today's workers can count on the program being solvent and able to pay benefits when they retire;
*Enact a more accurate measure of inflation which both raises revenues and reduces entitlement spending;
*Raise the debt ceiling by $1 trillion which could last about one year at the new levels of spending.