The course to fiscal sanity is straightforward: Congress and the next president must work together to reduce spending, especially on Medicare, and increase taxes, writes Ron Haskins.
The two biggest issues in the 2012 election are the economy and the deficit. Opinions vary on which issue should take priority, but the polls show that Americans put both issues at the top of those they want their new president to address. Not surprisingly, all the Republican candidates and President Obama have promised that they will reduce the nation's deficit in the near future. Although none of the Republican candidates have laid out a detailed plan for deficit reduction, all of them would cut spending deeply and none would increase taxes. President Obama, by contrast, has consistently called for both spending cuts and tax increases, especially tax increases on the rich. All of the Republicans have also called for reducing the growth rate of entitlement programs, including Medicare and Social Security, although, again, they do not offer specific plans for doing so. However, they all call for a basic reform of Medicare financing—usually called "premium support"—in which the elderly would be given a fixed amount of money each year to purchase a health insurance plan of their choice. By contrast, President Obama, as recently as last December, has specifically ruled out this type of Medicare reform. Thus, Americans will be offered a clear choice between President Obama and any of the Republican candidates on deficit reduction: President Obama would cut spending other than Medicare and Social Security, the two biggest entitlements, and increase taxes on the rich; Republicans would cut spending, including spending on the big entitlements, while not increasing taxes.