Original Link: http://www.boston.com/Boston/politicalintelligence/2011/11/romney-would-raise-age-for-social-security-and-medicare-cost-cutting-plan/b7G1Wh4FOaDsqF5aMONLSM/index.html
By Donovan Slack
Mitt Romney unveiled a sweeping budget-cutting plan today that would increase
the eligibility age for Social Security and cap Medicaid payments to states.
Romney’s plan would also increase the eligibility age for Medicare and allow
seniors to choose between the government-sponsored plan and private
The plan would cut at least $500 billion per year from the federal budget as
of 2016 and dramatically shrink the government, pulling back funding from areas
that Romney says the nation can no longer afford.
Those areas include Amtrak, which would lose all government subsidies. Romney
would also slice $600 million from the National Endowment for the Arts and
Humanities, the Corporation for Public Broadcasting and the Legal Services
Romney also would cut foreign assistance to countries that are not aiding US
interests. An example is China, which Romney said gets $27 million in US aid.
“There are some who are going to argue that fiscal responsibility is
heartless and immoral,” he said. “No, what’s heartless is to imperil our
children and what’s immoral is to imperil the strength of a nation that was
founded under God and preserved by His hand.”
Romney campaign advisers said the pace of changes to Social Security,
Medicaid and Medicare had yet to be decided but they said current and soon-to-be
beneficiaries would not be affected.
The plan resembles one put out earlier this year by Representative Paul Ryan,
which also would have capped Medicaid payments to states in block grants. But
Ryan’s plan would have privatized Medicare, the federal health care insurance
for seniors. Romney’s plan would keep Medicare intact, but allow seniors to
choose other, private insurance options.
Romney said his plan will lead to a “simpler, smaller and smarter” federal
The former Massachusetts governor and hopeful GOP nominee for the presidency
unveiled the fiscal management plan at an event this afternoon organized by a
group with ties to another GOP hopeful, businessman Herman Cain.
The Americans for Prosperity Foundation is investigating its financial
dealings with a Wisconsin group formed by Cain campaign adviser Mark Block after
reports that money from the foundation may have illegally been funneled to the
Cain campaign through the Wisconsin group, called Prosperity USA, according to
the Center for Public Integrity’s iWatch News.
Cain appeared at today’s event and, while not directly addressing the
controversy, said he is proud of his association with the Americans for
Prosperity Foundation, whose board includes David Koch.
“I am the Koch brothers’ brother from another mother...and proud of it,” he
Cain did not mention another controversy that has roiled his campaign in
recent days: revelations that he faced allegations of sexual harassment when he
worked for the National Restaurant Association. The association paid settlements
to at least two women who complained Cain made remarks that made them feel
In his speech to a packed ballroom at the Washington Convention Center, Cain
spent much of the time talking about his now-famous “9-9-9” tax plan, which
would eliminate the current tax code and replace it with a flat 9 percent income
tax, corporate tax and sales tax.
Here is a fact sheet about Romney’s fiscal plan released today by the Romney
Set Honest Goals: Cap Spending At 20 Percent Of GDP
Any turnaround must begin with clear and realistic goals. Optimistic
projections cannot wish a problem away, they can only make it worse. As
president, Romney’s goal will be to bring federal spending below 20 percent of
GDP by the end of his first term:
•Reduced from 24.3 percent last year; in line with the historical trend
between 18 and 20 percent
•Close to the tax revenue generated by the economy when healthy
•Requires spending cuts of approximately $500 billion per year in 2016
assuming robust economic recovery with 4% annual growth, and reversal of
irresponsible Obama-era defense cuts
Take Immediate Action: Return Non-Security Discretionary Spending To Below
Any turnaround must also stop the bleeding and reverse the most recent and
•Send Congress a bill on Day One that cuts non-security discretionary
spending by 5 percent across the board
•Pass the House Republican Budget proposal, rolling back President Obama’s
government expansion by capping non-security discretionary spending below 2008
Follow A Clear Roadmap: Build A Simpler, Smaller, Smarter Government
Most importantly, any turnaround must have a thoughtful, structured approach
to achieving its goals. Romney will attack the bloated budget from three
1.The Federal Government Should Stop Doing Things The American People Can’t
oRepeal Obamacare — Savings: $95 Billion. President Obama’s costly takeover
of the health care system imposes an enormous and unaffordable obligation on the
federal government while intervening in a matter that should be left to the
states. Romney will begin his efforts to repeal this legislation on Day One.
oPrivatize Amtrak — Savings: $1.6 Billion. Despite requirement that Amtrak
operate on a for-profit basis, it continues to receive about $1.6 billion in
taxpayer funds each year. Forty-one of Amtrak’s 44 routes lost money in 2008
with losses ranging from $5 to $462 per passenger.
oReduce Subsidies For The National Endowments For The Arts And Humanities,
The Corporation For Public Broadcasting, And The Legal Services Corporation —
Savings: $600 Million. NEA, NEH, and CPB provide grants to supplement other
sources of funding. LSC funds services mostly duplicative of those already
offered by states, localities, bar associations and private organizations.
oEliminate Title X Family Planning Funding — Savings: $300 Million. Title X
subsidizes family planning programs that benefit abortion groups like Planned
oReduce Foreign Aid — Savings: $100 Million. Stop borrowing money from
countries that oppose America’s interests in order to give it back to them in
the form of foreign aid.
2.Empower States To Innovate — Savings: >$100 billion
oBlock grants have huge potential to generate both superior results and cost
savings by establishing local control and promoting innovation in areas such as
Medicaid and Worker Retraining. Medicaid spending should be capped and increased
each year by CPI + 1%. Department of Labor retraining spending should be capped
and will increase in future years. These funds should then be given to the
states to spend on their own residents. States will be free from Washington
micromanagement, allowing them to develop innovative approaches that improve
quality and reduce cost.
3. Improve Efficiency And Effectiveness. Where the federal government should
act, it must do a better job. For instance:
oReduce Waste And Fraud — Savings: $60 Billion. The federal government made
$125 billion in improper payments last year. Cutting that amount in half through
stricter enforcement and harsher penalties yields returns many times over on the
oAlign Federal Employee Compensation With The Private Sector — Savings: $47
Billion. Federal compensation exceeds private sector levels by as much as 30 to
40 percent when benefits are taken into account. This must be corrected.
oRepeal The Davis-Bacon Act — Savings: $11 Billion. Davis-Bacon forces the
government to pay above-market wages, insulating labor unions from competition
and driving up project costs by approximately 10 percent.
oReduce The Federal Workforce By 10 Percent Via Attrition — Savings: $4
Billion. Despite widespread layoffs in the private sector, President Obama has
continued to grow the federal payrolls. The federal workforce can be reduced by
10 percent through a “1-for-2” system of attrition, thereby reducing the number
of federal employees while allowing the introduction of new talent into the
oConsolidate agencies and streamline processes to cut costs and improve
results in everything from energy permitting to worker retraining to trade
If pursued with focus and discipline, Romney’s approach provides a roadmap to
rescue the federal government from its present precipice. But that respite will
be short-lived without a plan for the looming long-term threat posed by the
unsustainable nature of existing entitlement obligations. Romney proposes
reforms that will strengthen both Social Security and Medicare, preserving
benefits for today’s seniors while putting the program on sound footing for
generations of seniors to come.
Social Security: No one at or near the retirement age will see any changes
and tax hikes cannot be on the table. Instead, Social Security can be placed on
a sustainable trajectory with commonsense reforms:
•Gradually raise the retirement age to reflect increases in longevity
•Slow the growth in benefits for higher-income retirees
Medicare: Medicare should not change for anyone in the program or soon to be
in it. Nor should tax hikes be part of the solution. Reforms must honor
commitments to our current seniors while giving the next generation a
revitalized program that offers the freedom to choose what their coverage under
Medicare should look like:
•Give future seniors a choice between traditional Medicare and many other
healthcare plans offering at least the same benefits
•Help seniors pay for the option they choose, with a level of support that
ensures all can obtain the coverage they need; provide those with lower incomes
with more generous assistance
•Allow beneficiaries to keep the savings from less expensive options or
choose to pay more for costlier plans
•These reforms will encourage insurers to lower costs and compete on the
quality of their offerings
•Gradually raise the retirement age to reflect increases in longevity
QUESTION AND ANSWERS ROMNEY’S PLAN TO REFORM MEDICARE
•Nothing changes for current seniors or those nearing retirement
•Medicare is reformed as premium support system, meaning that existing
spending is repackaged as a fixed-amount benefit to each senior that he or she
can use to purchase an insurance plan
•All insurance plans must offer coverage at least comparable to what Medicare
•If seniors choose more expensive plans, they will have to pay the difference
between the support amount and the premium price; if they choose less expensive
plans, they can use any left over support to pay other medical expenses like
co-pays and deductibles
•“Traditional” fee-for-service Medicare will be offered by the government as
an insurance plan, meaning that seniors can purchase that form of coverage if
they prefer it; however, if it costs the government more to provide that service
than it costs private plans to offer their versions, then the premiums charged
by the government will have to be higher and seniors will have to pay the
difference to enroll in the traditional Medicare option
•Lower income seniors will receive more generous support to ensure that they
can afford coverage; wealthier seniors will receive less support
•Competition among plans to provide high quality service while charging low
premiums will hold costs down while also improving the quality of coverage
enjoyed by seniors
What are the immediate effects of this plan?
This plan has no effect on current seniors or those nearing retirement. It
will go into effect for younger Americans when they reach retirement in the
How is this different from the Ryan Plan?
Romney shares Ryan’s goals and believes his general approach of premium
support is the right one. Existing Medicare spending would be repackaged as a
fixed-amount benefit to each future senior that he or she can use to purchase an
insurance plan with coverage at least comparable to what Medicare provides
today. Unlike the Ryan Plan, Romney’s approach keeps traditional Medicare
available as one of the insurance plans that seniors can choose among. Other
details will differ as well.
How high will the premium support be? How quickly will it grow?
Romney continues to work on refining the details of his plan, and he is
exploring different options for ensuring that future seniors receive the premium
support they need while also ensuring that competitive pressures encourage
providers to improve quality and control cost. His goal is for Medicare to offer
every senior affordable options that provide coverage and service at least as
good as what today’s seniors receive. Lower income seniors in the future will
receive the most generous benefits to ensure that they are able to get care
every bit as good as that provided in the current Medicare program.
How will the plan impact total Medicare spending?
The total impact on spending will depend on a number of factors, including
the rate of premium support increase and the effect of competitive pressure on
providers. By replacing the inefficiency of the current system with a
competitive, market-oriented system in which every provider – including the
government – wants to find the most efficient way to provide high quality care,
the plan puts the future of Medicare on a sound footing to meet the needs of
How will traditional Medicare remain an option?
Traditional Medicare will compete against private plans. It will be operated
by the government and funded by premiums, co-pays, and deductibles that are set
at the level necessary to cover its costs. The attractiveness of this option to
future seniors will depend on how its efficiency and quality compares to that
offered by other providers in the marketplace. Future seniors will benefit from
the innovation and competition among options.
How will seniors be affected by the costs of different options?
Future seniors will be able to enjoy the savings from selecting less
expensive plans, or choose to pay more for costlier options. When the insurance
premium costs less than the support provided, the balance will be available in
an HSA-like account to pay for other out-of-pocket health expenses.