The Heritage Foundation has developed a formula, made possible by a grant from the Peterson Foundation, that could balance the budget in 10 years, reduce the debt to 30 percent of gross domestic product within 25 years, cut the size of the federal government in half by 2036 and reform the tax code. It also could restructure Social Security, Medicare and Medicaid while protecting the most vulnerable and not increasing taxes, if — and it is a very big "if" — politicians prefer the solution to continued bickering.
* Social Security: The plan's centerpiece foresees "a gradual transition over many years to a flat benefit system ($1,200 per month in 2010 dollars that would be indexed in future years) to protect seniors from the risk of living in poverty." Higher-income senior citizens would see gradual reductions in their benefits, based on their non-Social Security income. Benefits for single seniors earning $100,000 and couples earning $165,000 would be phased out.
The minimum retirement age would increase to 68, reflecting today's longer life expectancy. "Those who work past their full retirement age would receive a special annual tax deduction of $10,000, regardless of income level." The tax on retirement income would be eliminated.
The plan would make seniors less dependent on income from Social Security by offering them savings options. "A new savings plan would automatically place 6 percent of a worker's income in a savings plan they own and control, unless they voluntarily opt out of enrollment. This money would not be double-taxed, unlike today's Social Security payments and other savings options."
* Medicare: "Transformed from its current unsustainable and open-ended system into a defined contribution that helps those who need it most." Medicare eligibility would be determined on non-Social Security income, with a similar means testing of allotments.
All seniors would be allowed to choose from traditional Medicare fee-for-service coverage, as well as expanded options in private plans, ensuring competition and controlling costs.
Unlike the current program, the reform would offer catastrophic health coverage as a standard feature in both Medicare and private plans.
All of this is linked to full repeal of the health care reform law. The Heritage plan proposes to create a health care system driven by consumers, not managed by government.
* Medicaid: Tailored to focus on the disabled and vulnerable elderly. "States would be given greater flexibility to experiment with health programs" and would "cap Medicaid spending at 2007 levels."
* Tax reform: A single, flat tax for individuals, lowered overall rates, elimination of taxes on gifts and transfers. All deductions would be eliminated, except for mortgage interest, charitable contributions and education.
* Federal spending: Nondefense discretionary items would revert to 2008 levels. Federal spending has jumped 21 percent faster than inflation in just the past three years.
What's the difference between the Heritage Foundation plan and the one proposed by House Budget Committee Chairman Paul Ryan, R-Wis.? Stuart Butler, who headed the team that drew up the Heritage proposal, tells me the Ryan plan "can't balance the budget anytime soon. Ours does."
Knowing what must be done and not doing it is not just irresponsible, but deplorable.
The Heritage plan offers a way out if politicians put the welfare of their country ahead of their own.