Reforming entitlements

A paper by Laurence Kotlikoff has stimulated my attention. In it, he calls for a massive overhaul of social security and medicare, something that everyone knows needs to be done. To those that deny we need to do something, he posts a chart from the American Enterprise Institute that shows what typs of tax hikes we will need to pay for the entirety of these benefits.

Increase in Federal Income Taxes: 69%
INcrease in Payroll Taxes: 95%
Cut Federal Purchases: 106%
Cut Social Security and Medicare: 45%

The alternative to this is to propose serious reform to these systems, which would include privatising the two systems to disciple costs (but still keep equity).

He is right. But towards the end he notes that he would also repeal the Bush Tax Cuts so as to pay for the other 9 trillion dollars in debt that will be left over (mind you, there is about 50 trillion in debt to cut).

I would probably propose more spending cuts (GET RID OF THE POST OFFICE!), but Bush could use this to his advantage if he is re-elected. He could use income taxes as a bargaining chip to force fundamental reform in the two systems. It may not be enough, but it could help.

I am always for lower taxes, but I realize that if something is not done to fix these programs then I am going to have to pay much higher taxes than I would if we reformed the system now.

If Bush is able to do this, then he can claim the following
1) Weathered a recession
2) a terrorist attack
3) corporate scandal
4) and dealt aggressively with the terrorist threat

Not bad in my estimation.