In his latest attempt to cajole Republicans into raising taxes, Obama has called for a budget plan that makes some cuts to Medicare providers and subjects Social Security payments to the chained CPI. John Boehner was correct to reject this ploy of holding entitlement savings hostage for tax increases. However, he has come close to negotiating such a deal in the past, and there are some GOP officials who are saying they would still agree to such a trade. Lindsey Graham has already expressed encouragement over the proposal.
We must remember that even to the extent we would be willing to trade tax increases for something transformational, Obama’s proposal is not entitlement reform, and it certainly doesn’t represent something transformational. It is a proposal of austerity cuts to the status quo.
The problem with entitlements is not limited to the budgetary cost to the federal government, although that is certainly a major concern. The problem with our entitlements – in the case of Medicare and Medicaid – is the lack of choices, free market forces, and the inflationary cost of healthcare to the individual. The problem with Social Security is the lack of private property rights, dreadful rate of return, lack of individual liberty, and hopeless dependency on government. Limiting benefits to the chained CPI might be fine for the government option, but it should not replace policies that offer more choices. Means-testing benefits might save money, but we must not forget that Social Security is already means-tested, as its benefit formula is tendentious towards low-income earners relative to what they contribute to the program.
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