Despite the fact that America has faced a looming entitlement crisis for decades, politicians have been short on concrete proposals. Any genuine attempt at entitlement reform would necessitate asking voters to make sacrfices, and most politicians can’t win elections by doing that. However, one Republican congressman from Wisconsin is willing to give it a try.
Rep. Paul Ryan of Wisconsin’s 1st district is the ranking Republican on the House Budget Committee, and also sits on the Ways & Means Committee. In an op-ed that appeared in Wednesday’s Wall Street Journal, Ryan acknowledged what we all implicitly understand, but don’t want to face – that our current entitlement liabilities will either require massive future tax increases, or some very creative benefit cuts. In the interest of offering concrete reforms, Ryan said he will introduce legislation called “A Roadmap for America’s Future.” In his op-ed, Ryan described four key elements of his plan:
1. “It provides a refundable tax credit – $2,500 for individuals and $5,000 for families – to purchase [health] coverage. Individuals will be able to buy insurance offered by any provider in any state – not just the one where they live – and carry it with them if they move or change jobs.”
2. “The bill secures the existing Medicare program for those over 55…Those 55 and younger will, when they retire, receive an annual payment of up to $9,500 to purchase health coverage – either from a list of Medicare-certified plans, or any plan in the individual market, in any state. The payment is adjusted for inflation and based on income, with low-income individuals receiving greater support and a funded medical savings account.”
3. “Workers under 55 will have the option of investing over one-third of their current Social Security taxes into personal retirement accounts…The bill includes a guarantee that no one’s total Social Security benefits from the personal accounts will be less than if he had chosen to say in the current system.” Ryan also says the retirement age will have to be raised eventually, although he doesn’t make a specific suggestion on this point.
4. Ryan proposes a radical overhaul of federal tax law. “The rates in the simplified code are 10% on income up to $100,000 for joint filers ($50,000 for single filers); and 25% on taxable income above these amounts. There is also a generous standard deduction and personal exemption totaling $39,000 for a family of four. The alternative minimum tax is eliminated. And to promote long-term investment in economic growth, taxes on capital gains, dividends and estates are also eliminated.” Ryan also wants to drastically lower corporate taxes.
Ryan himself acknowledges that many Americans will disagree with his proposals. However, he deserves credit for taking up the issue, rather than running from the debate. It’s more than John McCain or Barack Obama are doing. Read Ryan’s entire op-ed here.