By John David Dyche
The most important but least talked about issue in the 2016 presidential campaign is entitlement reform.
There are two kinds of federal spending. Discretionary spending is on programs like defense, education, and transportation. Congress sets the amounts annually.
Mandatory spending includes programs like Social Security, Medicare, Medicaid, interest on the national debt and, now, Obamacare subsidies. According to fiscal policy watchdog The Concord Coalition, mandatory spending "essentially runs on autopilot under formulas set in law."
It currently constitutes about two-thirds of federal spending, or over $2.6 billion. Since the 1960s mandatory spending "has been growing as a portion of the budget and is projected to continue on that path."
The Heritage Foundation says, "Discretionary spending as a share of the budget will fall from two-thirds in 1964 to less than one-quarter in 2024, as entitlements grow uncontrolled. Mandatory spending will grow from one-quarter of the budget in 1965 to 63 percent by 2024."
The Congressional Budget Office warns, "Federal spending for Social Security and the government's major health care programs -- Medicare, Medicaid, the Children's Health Insurance Program, and subsidies for health insurance purchased through the exchanges created by the Affordable Care Act" will "rise sharply, to 14.2 percent of gross domestic product by 2040" under current law. That more than doubles the 6.5 percent historical average over the 50 years.
Defense spending is one victim of runaway entitlements. As a percentage of gross domestic product, it is less than half of what it was 50 years ago.
Some responsible Republican lawmakers, like Paul Ryan of Wisconsin, chairman of the influential House Ways and Means Committee, have tried to confront this slow motion crisis. Unfortunately, they usually have to deal with Democratic demagoguery for their efforts.
Republican presidential candidates have not given entitlement reform the attention it deserves. There is one big (in more ways than one) exception, however.
New Jersey Governor Chris Christie has tackled entitlements head-on. He has a detailed reform proposal to save entitlements for those who most need them while at the same time stopping the programs from cannibalizing the rest of the federal budget.
Christie claims his proposals will reduce the growth of entitlements by over $1 trillion during the next decade. His 12-point plan is available for inspection on his campaign website. Means-testing plays a big part of it.
On Social Security, Christie would not impact current retirees and phases in his reforms gradually. Future retirees with annual non-Social Security income up to $80,000 would receive full regular benefits, but others would be on a sliding scale with benefits phased out entirely for those that have $200,000 a year of other income. For couples, these thresholds would be higher.
He would also gradually raise the retirement age to 69 and eliminate the payroll tax on seniors who keep working after they reach the early retirement age that he would gradually increase to 64. Cost of living adjustments would better reflect reality and "a one-time 5 percent increase in monthly benefits will be provided to all beneficiaries when they reach the age of 85."
Christie would also means test Medicare, with seniors having $85,000 a year incomes paying 40 percent of premium costs. That contribution increases to 90 percent for incomes above $196,000 a year. He would gradually increase the Medicare eligibility to age 69 by 2064. His plan would also simplify deductibles and cost-sharing.
Medicaid would become an inflation-adjusted block grant program so states can experiment with more flexibility. Christie proposes that Medicaid recipients with incomes above 100 percent of the federal poverty level "would have a $10 copay for a doctor's visit and a $20 copay for a hospital visit" to "introduce economics into the health care purchase decision and encourage rational use of health care resources."
Finally, on oft-abused disability insurance, Christie would focus on "solutions that keep people in the labor force and living productive lives." These include tax incentives to employers for providing short-term private disability coverage and more money for case reviews with an eye toward returning recipients to work.
Other Republican candidates talk about entitlement reform, but not with the frequency or specificity of Christie. None of this is sexy stuff, and certain candidates can get more attention by insulting their competitors.
Christie deserves credit and congratulations for offering what voters claim they want -- detailed policy proposals to solve tough problems.
(John David Dyche is a Louisville attorney and a political commentator for WDRB.com. His e-mail is email@example.com. Follow him on Twitter @jddyche.)
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