Should we raise taxes or cut Medicare?

Soon America must face a choice. Our government’s status quo taxing and spending policies cannot continue much longer. No, this isn’t based on Obama’s spending over the past few years or Republican intransigence over the debt limit. Those are important to this debate, but they’re not the long-term factors I’m talking about here. Spending and taxing have to change because we, as a society, are getting older and our health care costs are continuing to increase. Those two factors alone mean that our traditional rates and methods of taxation cannot support the traditional benefits given out by our government. The following graph shows that the effects of an aging population will mean that our country must spend 3.5 percent more of its GDP on Medicare by 2035 than it does today. The fact that health care costs grow faster than the economy as a whole means an additional 2 percent of GDP will have to go to Medicare by 2035.

via Ezra Klein

The very predictable rising cost of aging and health care leads us to a societal choice: either we give up the social contract that America has maintained for the past 50 years, or we raise taxes AND reform our programs to support the Baby Boomers just as the Baby Boomers supported their parents in retirement.

Republican lawmakers, by and large, have chosen the first option. Most have voted for Paul Ryan’s budget plan, which gets rid of traditional Medicare by changing it into a voucher program which only covers a third of seniors’ healthcare costs. That is the path you have to take if you do not want to raise taxes or get rid of tax loopholes to pay for the cost of Baby Boomers growing old. The most important thing to most Republicans is to protect the rich from increased taxes. If their vision wins out in the future, (tax revenues stay where they are right now) the government will have to shift costs onto seniors, undoing the social contract that we have in this country. Instead of the government covering seniors’ health insurance through Medicare, seniors will have to pay out of pocket to afford private insurance. If seniors living on fixed incomes can’t afford to buy private insurance with their voucher, then too bad for them. If the government doesn’t raise taxes, it cannot afford to help them.

There is another option though. If taxes are raised, or if we just clean up the tax code so that there are not so many loopholes, we do not have to face a world of seniors dying in their homes of diabetes or cancer because they could not afford private insurance. Its also important to emphasize that this is not a complete either/or question. We can still reform Medicare to make it cheaper while raising taxes to help pay for the inevitable additional costs the program will incur. This is generally the Democrats’  position.

Either we increase taxes (by raising rates or cutting loopholes), or we have to get rid of our Medicare program. The only other option is to adopt a complete system of socialized medical insurance  to keep our costs down. Those are our options. Americans must choose.

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