Friday, November 16, 2012

The Way Forward


Tara Pihn

      The fiscal cliff is the hot topic post-election and the economic reality (as opposed to political myth) is that the government needs to increase revenue and cut costs to cope with the demographic bulge created by aging baby boomers. And they need to do it fast. Truth is all aspects of the federal budget are manageable with the exception of this perfect storm of prolonged economic malaise (thus lowering tax revenue) and exploding elderly population which are costly to care for and are paid for (in most instances) via government programs (Medicare & Medicaid). We are only able to do it now because we borrow heavily abroad and, as even a child knows, our national debt is rising exponentially. And it's going to get worse, much worse, very soon.

We can't afford to raise tax rates for high income earners and/or the wealthy as that will destroy their incentive to work and produce, take risk and invest, hire and contract.   We can't afford to cut programs designed for the aged and the poor. These are our most vulnerable and we must not abandon our moral obligations.

What we can do is reform the tax code to flatten the tax rate structure and eliminate needless tax loopholes. The Republicans will support this as, if done right, we will be able to increase tax revenue without raising tax rates.

Meanwhile we need to engage in aggressive entitlement reform. If done in a thoughtful way, this can be done without cutting benefits to seniors or punishing healthcare providers. I am talking about payment reform, care coordination, EHR, ACO's, Medical Homes and all the other gizmos that promise to bend the cost curve. The Democrats will support this as, if done right, we will be able to slow the growth of the Medicare and Medicaid programs without cutting benefits to seniors.

Let's hope our leaders have the good sense to put a visionary, bi-partisan plan together so we can all look forward to a brighter and more prosperous 2013.


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