Ryan-Wyden Plan - Progress for Democrats, but we need more.

The Democratic Party has become the party for those that want to be irresponsible, in this state, and in Washington. That is why it was surprising to see Ron Wyden, a Democratic Senator from Oregon, agree to a plan to reform Medicare. Most Democrats want to continue with the lie that we can pay for the current system for all, or even more spurious claims that we can just tax the rich and solve all our problems. But before anyone could get their hopes up that Democrats are willing to take serious the issue of Medicare, Obama demagogued the plan, saying it would cause Medicare to wither on the vine. At the same time, notice he did not suggest another way to deal with the issue. We need to deal with Medicare reform in the next few years. It should be a major issue that each candidate for president needs to have a reform plan to be qualified.

First why is so important to pass reform now? Politically to get support of voters, any plan would need to leave Medicare as is for those already retired or very close to retirement. The longer we wait, the higher the age will need to be, to have as the borderline to be unaffected by the reform plan. If we wait too long, it will likely force us to come to crisis, like Europe is in now. Despite that crisis fixing the problem at that time won’t be without much protest and anger. Look at the response here in Wisconsin to Scott Walker showing leadership on fixing the root cause of fiscal issues. At the Federal level it will be worse. The federal government will have to alter the actual benefits to be paid for most people after years of implying the system could continue as is, unlike what was done here in Wisconsin at the state level. 

Everyone knows the issues that we are facing, the biggest of which is that the ratio of people working to those retired is falling and will fall even more as more Baby Boomers retire. The magnitude of the problem makes the idea of just raising taxes to pay for it, an unworkable solution. That would require stealing more and more from each generation until the system crashes. Obama in his health care law plans to deal with the issue by setting up a panel to determine what services to deny to seniors. This will likely fail as pressure to change the system will keep that from cutting costs.

I am glad to see a Democrat finally willing to be responsible enough to admit we have a problem. Unfortunately this plan will be insufficient, but a step in the right direction to fix the issue. I was asked by Mark Belling on the radio this week; how do I know that introducing competition will not be enough to fix the problem? At that point I was not sure what to say, but as I think about it more, Paul Ryan has studied this issue more thoroughly than any other politician. If he thought leaving Medicare as an option would work, it would have been part of his original proposal. I suspect that introducing competition will help to control costs, but leaving current Medicare as an option will limit the effectiveness of this idea. That is why they have the provision that congress has to vote how to make cuts to Medicare if cost savings is not achieved. This basically leaves fixing the issue to a future congress. That is why I prefer the original Ryan Plan. In fairness to Ryan, Medicare reform will only happen if both parties at least agree on the facts and the need for reform.

We will need to increase the age for both Social Security and Medicare. Effectively people will need to work longer to afford the kind of retirement many want. In the long run there is no other way around this issue. We need to produce goods and services not just move money around from one person to another. This either requires large productivity improvements or increasing the ratio of people working to those retired.

For us the important lesson is that in Senate elections and the Presidential election we need to elect people who will take this issue seriously. Based on this we can rule out Obama since he refuses to even think of behaving responsibly. I have concerns about Gingrich as he has demonstrated no courage to lead on this issue. We also must rule out people that have no chance of beating Obama, such as Ron Paul, that would be that same as voting for Obama, leading to a crisis. Romney is only barely acceptable since his plan is basically like this new plan. My guess is the others would at least support this new plan or better and they could win. What any of these people do, will depend on what happens with Senate elections. This makes the Senate elections the key to avoiding a fiscal disaster. Failure on entitlement reform will be devastating to all Americans, and must be avoided.