6 Ways to Look at the National Debt: Is the Debt Problem Solvable?


Can the Federal Debt Be Solved?

Raise Taxes on the Rich and Corporations, Protect Social Security and Medicare, More Health Reform: Robert B. Reich, Berkeley Professor and Secretary of Labor under President Clinton

The debt problem can be solved – and we don't have to sacrifice vital public services or Social Security, Medicare, and Medicaid.

It requires two steps.

First, increase taxes on the very wealthy. Their share of national income has been rising for thirty years (from 10 percent to over 20 percent) while their tax rates have been dropping. Before 1981, the marginal income tax rate on the top never dropped below 70 percent. They're now 35 percent. Meanwhile, the estate tax has disappeared for estates valued below $5 million, or $10 million a couple. And the capital gains tax (most of the income of the super-rich comes from capital gains) is now only 15 percent.

Return to the tax rates we had thirty years ago and the richest 1 percent of Americans would contribute about $300 billion more in taxes this year. That's trillions over the next decade – enough to reduce make a major dent in the federal deficit.

Here's the other thing that needs to be done: Control the rise in medical costs. The problem isn't Medicare and Medicaid. They're huge and growing fast only because medical costs underlying are huge and growing fast. Most of us know that because our premiums, co-payments, and deductibles are soaring.

How to control out-of-control medical costs? Allow Medicare and Medicaid to use their massive bargaining leverage with doctors, hospitals, and pharmaceutical companies in order to get lower prices and better deals.

Even more importantly, have them use their leverage to turn the nation's health-care system from a fee-for-as-many-services-as-possible one into a system that is paid for keeping people healthy and providing high-quality care. Medicare and Medicaid would pay a certain amount per patient, and the accountable-care organization would be responsible for outcomes.

Can the Federal Debt Be Solved?

Cut Military Spending, Reform Entitlements, Sell it to the Public: Robert L. Bixby, executive director of The Concord Coalition

Fortunately, there are many possible solutions to the enormous fiscal and economic challenges facing the country. But they will require political courage, bipartisan cooperation and the active support of voters around the country.

Because the projected federal deficits are so large, we need to look at far more than the non-defense spending on which Congress has focused so heavily in recent weeks. The president's fiscal commission as well as other bipartisan groups have recommended a much more comprehensive approach. We must restrain military spending, take more effective action to curb runaway health care costs, and close the costly special-interest subsidies that clutter the tax code.

We must also reform Social Security, Medicare and Medicaid so that they can be sustained and continue to provide essential support for millions of Americans.

Democrats and Republicans must work together on these difficult changes. Otherwise political demagoguery could undermine the reforms. The Senate "Gang of Six" offers the most promising example of such cooperation.

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