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Benchmark federal tax revenue sufficient to balance the budget.
Finally, we need to implement a common-sense approach to addressing the sustainability of our two primary nondiscretionary budget items — Social Security and Medicare.
Here’s how we can sustainably fund Social Security:
Apply Social Security contributions to all earned and unearned income.
Adjust the income cap from $113,700 to a level needed to support a 75-year program sustainability. Employees and employers each pay 6.2 percent of wages for a total 12.4 percent Social Security (FICA) tax on wages up to $113,700. By expanding the tax base to all personal income (earned and unearned), the income cap will be adjusted to an amount needed to keep the Social Security Trust Fund solvent for a 75-year period.
Implement chained CPI by linking benefit increases not to changes in the consumer price index, but to what’s called the “chained CPI,’’ which takes into account product substitutions by consumers as prices fluctuate, i.e., purchasing chicken or pork in lieu of beef when beef prices spike.
To get Medicare back on a sustainable path, I’d recommend:
Making contributions apply to earned and unearned income.
Repealing the prohibition of Medicare negotiating prices on drug purchases.
Implement means testing.
Aggressively pursue, prosecute and treat abuse as criminal fraud and encourage “whistleblowing.”
Require transparent billing.
Implement “most favored pricing” — providing lowest price guarantees similar to the price-matching policies used by Best Buy or Wal-Mart.
Politically, it is going to be difficult to fix our tax code — just follow the lobby money. But the people I talk to are sick and tired of Washington’s continuing spectacle of one crisis after the other. It’s time to get our house in order.