Mitt Romney made some news last week by announcing his plans for the federal budget. His speech, and the details behind it, provided a glimpse at what a Romney Administration would look like on budget issues. And yet there was so much missing.
Romney urges a baseline spending number of 20% of GDP, and then goes out and makes the case for achieving that by cutting a whole host of programs. And I have to say that Romney’s point, that under current conditions some spending must be cut, is essentially true. He calls for $500 billion in discretionary cuts in 2016, with cuts to Amtrack, the National Endowment for the Arts, the Corporation for Public Broadcasting, and Planned Parenthood, among others. But as anyone who is serious about the budget knows cutting discretionary spending is a small part of dealing with the federal budget problems. Medicare, Medicaid, Social Security, and Defense are where the dollars are. And Romney moves on Medicare and Medicaid, tiptoes on Social Security, and moves to increase spending on Defense.
On Medicaid Romney moves most forcefully, as you might expect. He proposes to block grant Medicaid to the states, and cap the allowable rate of increase. Such proposals certainly limit federal spending on the program, but without question would lead to major cuts in services currently provided. With Medicaid funding consuming ever larger shares of state budgets under the current system the Romney method is an invitation to the states to cut the program to save dollars, which many most assuredly will do. On this question Romney ignores, as far as I can see, the underlying problem of the unsustainable increase in health care costs as well as the problems of those without health care coverage. Romney does say he is for repeal of “ObamaCare”, but fails to identify what he would do to provide coverage and restrain costs. Medicaid would take a body blow under this plan just based on medical inflation. The new “state freedom” to limit the program will result in further program scalebacks, which is the real Romney goal.
Romney also takes on Medicare, adopting the Ryan plan for “premium support” for Medicare recipients. Romney takes pains to differentiate himself from Ryan, but the scheme relies on the same principle.
First, Medicare should not change for anyone in the program or soon to be in it. We should honor our commitments to our seniors.
Second, as with Social Security, tax hikes are not the solution. We couldn’t tax our way out of unfunded liabilities so large, even if we wanted to.
Third, tomorrow’s seniors should have the freedom to choose what their health coverage looks like. Younger Americans today, when they turn 65, should have a choice between traditional Medicare and other private healthcare plans that provide at least the same level of benefits. Competition will lower costs and increase the quality of healthcare for tomorrow’s seniors.
The federal government will help seniors pay for the option they choose, with a level of support that ensures all can obtain the coverage they need. Those with lower incomes will receive more generous assistance. Beneficiaries can keep the savings from less expensive options, or they can choose to pay more for a costlier plan.
Finally, as with Social Security, the eligibility age should slowly increase to keep pace with increases in longevity.
These ideas will give tomorrow’s seniors the same kinds of choices that most Americans have in their healthcare today. The future of Medicare should be marked by competition, choice, and innovation—rather than bureaucracy, stagnation, and bankruptcy. Our path for the future of Social Security and Medicare is honesty and security, theirs is demagoguery and deception.
So Romney treads a little more carefully than Ryan, saying he would allow seniors the option of maintaining the current Medicare system, albeit at higher prices. He also fails to quantify how premium support would be adjusted for medical inflation, but does offer support for gradually raising the eligibility age, as he does with Social Security. He also supports some undefined amount of means-testing for Medicare benefits. My assumption here is that Romney feels that these types of changes will somehow restrain medical price inflation through “competition and choice”. Has not happened yet, and the criticism applied above on Medicaid applies here as well. Without adequate premium support many seniors will simply not be able to afford to keep these private policies. Romney remains vague in this area, but Medicare cost containment, under Romney, without attacking underlying health care inflation, must lead to a diminished ability of seniors to afford Medicare and an increase in seniors with limited or no coverage.
On Social Security Romney offers a rise in age eligibility, along with a slowing of the “growth in benefits” for future retirees. I didn’t see anything specific, but assume Romney would tinker with the COLA formula.
Romney does make some suggestions that make sense, such as the consolidation of the many programs that have different bureaucratic homes, such as Workforce Development and Trade Policy. Noticeably absent was the Romney suggestion on revenues, and what the appropriate level of revenues should be as a percentage of GDP to run the government. He also paid lip service to solving the deficit, (“deficits do matter”)but failed to say whether his plan in fact would do that. (It would not)
And while Romney called for big domestic discretionary cuts he has also called for huge increases in spending on defense. So Romney proposes at least a partial transfer of spending from domestic to defense, makes no representation on revenues, and expects folks to believe that he will eliminate the deficit because he writes that deficits matter??? For a smart man it is not a serious plan, and the worst part about it is that Romney well knows it. Read the Romney speech here. And read the New York Times story on the speech here.