How to Fix the Debt
May 26, 2011
With U.S. debt projected to grow more than 275 percent by 2035, the Peter G. Peterson Foundation asked six think tanks to find ways to address the nation's long-term budget challenges, says the Washington Post.
Below are details of two of the six plans.
Heritage Foundation, Stuart Butler:
- The key is to transform the relationship between the federal government and individuals in a way that restores individual opportunity and national prosperity.
- That requires a single, flat-tax rate that collects revenue without economic distortions.
- Butler's plan refocuses Social Security and Medicare into real insurance programs that protect seniors from poverty while no longer debt-financing benefits for the rich.
Joseph Antos, Andrew Biggs, Alex Brill and Alan Viard of the American Enterprise Institute:
- Their plan fundamentally reforms the tax code while aggressively cutting federal spending to hold down the debt.
- Medicare is converted to a premium support program and the tax break for employer-provided health insurance is replaced by a refundable tax credit to buy insurance, with the largest subsidies going to those with greater financial need or higher health risks.
- Medicaid is converted to a block grant program, giving states greater flexibility, accompanied by greater responsibility.
- The plan also modifies Social Security to offer a flat, poverty-level benefit to all beneficiaries, and adopts a consumption tax to replace the individual and corporate income taxes and the estate tax.
John Irons of the Economic Policy Institute, Zachary Kolodin of the Roosevelt Institute, the Bipartisan Policy Center and the Cneter for American Progress also offered plans to cut America's debt.
Source: "How We Would Cut America's Debt," Washington Post, May 20, 2011.
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