economic syrup. security without passing along a crushing financial burden to younger generations. Our plan achieves the following:

Transcription

1 ü There are various approaches to achieving these savings. One option would be to rem the shared financing arrangement between the federal state governments, which has led to gaming of the matching payment system rising responsibilities between the federal government the states, so that each will fully finance administer its selected components of the Medicaid program. Saving the American This will Dream: restore incentives The Heritage cost containment, Plan to fix the slow Debt, future Cut program Spending, spending growth. Restore Prosperity The Heritage Foundation Stuart Butler, Alison Fraser, Bill Beach ü Cap awards noneconomic punitive damages medical malpractice. America must change course. We face a staggering fiscal problem that threatens the very future of our nation. ü Unless Start we large-scale act wisely, testing massive of systemic spending rems, surging including public safe debt harbors will destroy practices the foundations of our that economy conm to darken accepted the guidelines, American dream specialized our malpractice children courts, grchildren. But this grim future is administrative is not inevitable. proceedings The Heritage to resolve fiscal disputes. plan will solve America s twin crises of debt spending with rems that are consistent with the principles of democratic governance deeply held American values. Help reduce long-term health care spending to treat obesity-related illnesses including The plan does diabetes, this by heart cutting disease, government cancer, down stroke by to size, re-energizing imposing an American excise tax enterprise on the through fundamental manufacture tax rem, importation transming of beverages entitlement sweetened programs with sugar to or provide high-fructose real corn plan achieves the following: The Task Force plan accommodates a permanent fix to the sustainable growth rate (SGR) Balances the federal budget in 10 years keeps it it balanced ever at no more than mechanism that currently requires unrealistic automatic cuts in physician payments, 18.5 percent of GDP. Americans have made clear to Washington over many decades how much they which are Congress willing to has pay been annually government. delaying. We keep it it at that level. SOCIAL Reduces SECURITY the debt to 30 percent of GDP within 25 years puts it it on track to continue falling thereafter. Lower debt will remove the threat of financial crisis restore the confidence In order to of guarantee citizens, investors, that Social Security lenders. can It It will pay also benefits sharply the reduce next the 75 debt years burden beyond: future generations help to secure our prosperity. Gradually raise the amount of wages subject to payroll taxes (currently $106,800) over Replaces the the next complex 38 years to reach unfair the tax 1977 code target with of a covering completely 90 percent new tax of system. all wages. We replace the current Byzantine tax system, including the payroll tax, with a much simpler single-rate system that minimizes tax distortions perverse incentives. Change the calculation of annual cost-of-living adjustments (COLAs) benefits to more accurately reflect inflation. (This is a technical change that will be applied in all Protects America its interests around the globe by ensuring full funding national government defense. Defense programs is is that a core use constitutional COLAs, including responsibility the indexation of the federal of tax brackets.) government essential to preserving American liberty prosperity. Waste inefficiency should be rooted Slightly out, but reduce the resulting the growth savings benefits should compared be used to meet current defense law needs. approximately the top Creates a health care system that is is afdable both the nation individuals families. We replace the Obama rem with a system that fosters individual choice, competition, state innovation to control underlying health costs while assuring 54

2 continuous portable coverage. By overhauling subsidies tax breaks ü There health are various care, approaches to ach we ensure that all Americans can afd adequate coverage. rem the shared financing arrange governments, which has led to gam Redesigns Social Security Medicare as sustainable programs so that they protect health care costs. Through a federa seniors but will be around our children grchildren. Today s retirement system cannot pay all of its promised benefits without inundating our children responsibilities with debt. between the federal Accordingly, we transm these defined-benefit entitlement programs into fully budgeted finance real administer its sele insurance programs that focus on those who need them Saving retirement the American security, This will with Dream: restore checks incentives The Heritage cost assistance phased down by income those who do not really need them. spending We adjust growth. Restore Pr benefits to recipient need without raising taxes on current future Americans. The Heritage Fou Stuart Butler, Alison Frase Provides strong incentives working Americans to save invest. Our tax Social Security rems provide new ways Americans to save their future security to create capital enterprise. ü Cap awards noneconomic p America must change course. We face a staggering fi SPENDING of our nation. ü Unless Start we large-scale act wisely, testing massive of systemic spendin foundations of our that economy conm to darken accepted the guidelines America Social Security But this grim future administrative is not inevitable. proceedings The Heritage to resol fi debt spending with rems that are consistent w The Heritage Social Security plan provides strong retirement security deeply held seniors American that is values. Help reduce long-term health care spendin afdable thus assured future generations. Unlike today, the plan provides complete protection seniors against poverty assures Americans The that plan they does diabetes, will this have by heart a cutting secure disease, government cancer, down stroke to siz retirement. through fundamental manufacture tax rem, importation transming of beverages en economic syrup. security without passing along a crushing f Social Security will gradually be transmed from an income plan replacement achieves the following: system back to its original purpose of providing economic security seniors. Social Security The Task benefits Force will plan evolve accommodates a perm over time into a flat payment system to keep seniors out of poverty Balances throughout the federal their retirement budget in 10 years ke mechanism that currently requires unrealis supplement the savings income of middle-class retirees Our percent plan will of also GDP. create Americans have made clea important incentives workers of all income levels to save more much they which retirement. are Congress willing to has pay been annually government. delayin We Because the new Social Security is a real insurance system, designed SOCIAL Reduces to be SECURITY the afdable debt to 30 percent to of GDP within protect seniors from hardship, retirees with high non-social Security falling incomes thereafter. will receive Lower debt a will remove the th smaller check. Affluent seniors who do not need Social Security confidence to In prosper order to of will guarantee citizens, receive investors, that no Social Security lenders. can It wp check, ensuring that checks will be available to future retirees. Currently, future generations the IRS income-adjusts help to secure our prosperi Social Security checks surreptitiously even modest-income seniors. Gradually We end that. raise Our the income amount of wages subje adjusting is transparent it will not touch the checks of modest-income Replaces the the next seniors. complex 38 years to reach unfair the tax 1977 code target witho the current Byzantine tax system, including the p The Social Security early full retirement ages will be raised system gradually that minimizes then indexed tax distortions pervers Change the calculation of annual cost-of-li life expectancy, creating a more reasonable balance between the number of years a person works the years he or she receives Social Security benefits. more accurately reflect inflation. (This is a Protects America its interests around the g national government defense. Defense programs is that a core use constitutiona COLAs, inc To encourage people to stay in the workce longer, Americans who essential work beyond to preserving the full American liberty retirement age will receive a substantial tax deduction, leading to be a rooted higher Slightly out, level but reduce of the after-tax resulting the growth savings benefits should com be income than today s if they are not claiming benefits. Creates a health care system that is afdable families. We replace the Obama rem with competition, state innovation to control unde 55

3 Medicare ü There are various approaches to achieving these savings. One option would be to rem the shared financing arrangement between the federal state The Heritage plan governments, transms Medicare which has from led an to open-ended gaming of the matching unsustainable payment defined-benefit system rising entitlement into a properly budgeted program that focuses Medicare subsidies on those who need them most. The new Medicare program would look much more like the Federal Employees Health Benefits Program responsibilities (FEHBP), between the health the federal care system government members the of states, Congress so that each federal will employees. fully finance administer its selected components of the Medicaid program. Saving the American This will Dream: restore incentives The Heritage cost containment, Plan to fix the slow Debt, future Cut program Spending, Over a five-year period, spending the growth. plan transms Restore Medicare Prosperity into a defined-contribution system (known as premium support), with strong health The Heritage security Foundation the poor less healthy new protections against catastrophic Stuart costs Butler, Alison all enrollees. Fraser, Seniors Bill will Beach be able to use the contribution toward a plan of their choice or premium-based, fee--service coverage. Stronger competition consumer choice will replace government regulation as the tool to reduce costs ü spending. Cap awards This premium noneconomic support will punitive be income-adjusted damages medical using the malpractice. same America parameters must as Social change Security. course. We face a staggering fiscal problem that threatens the very future of our nation. ü Unless Start we large-scale act wisely, testing massive of systemic spending rems, surging including public safe debt harbors will destroy practices the foundations Like the Social of our Security that economy conm adjustments to darken accepted in retirement the guidelines, American age, dream specialized Medicare s our malpractice eligibility children age courts, will grchildren. gradually But be raised this grim to 68 future in administrative 10 is years not inevitable. will proceedings be The indexed Heritage to thereafter resolve fiscal disputes. plan increases will solve in America s longevity. twin crises of debt spending with rems that are consistent with the principles of democratic governance Medicare s deeply held traditional American fee--service values. system also changes during the five-year transition. Help reduce long-term health care spending to treat obesity-related illnesses including Deductibles other out-of-pocket costs are adjusted. Building on current income-adjustment The policy, plan premiums does diabetes, this by heart Parts cutting disease, B government cancer, D rise according down stroke by to size, to income, re-energizing imposing an an income-adjusted American excise tax enterprise on the premium through Part A fundamental manufacture is phased in with tax rem, importation the highest-income transming of beverages seniors entitlement sweetened paying programs with full, sugar unsubsidized to or provide high-fructose premiums. real corn plan Health achieves care the families following: The Task Force plan accommodates a permanent fix to the sustainable growth rate (SGR) The Balances Heritage the plan federal ensures budget that everyone, in 10 years regardless keeps of job it situation, balanced is ever eligible at no a more tax credit than or mechanism that currently requires unrealistic automatic cuts in physician payments, other 18.5 help percent in purchasing of GDP. health Americans insurance. have This made means clear that to Washington people can over buy, many own, decades keep how the health much care they which plans are Congress of willing their choice. to has pay been annually government. delaying. We keep it at that level. The SOCIAL Reduces current individual SECURITY the debt to tax 30 exclusion percent of GDP employer-sponsored within 25 years health puts insurance it on track other to continue tax mechanisms falling thereafter. is replaced Lower with a debt nonrefundable will remove fixed the threat tax credit of financial households crisis to restore purchase the health coverage. confidence In order The credit to of guarantee citizens, is phased investors, that out Social as income Security lenders. rises can It will pay eliminated also benefits sharply the reduce upper-income next the 75 debt years households. burden beyond: The future switch generations from the exclusion help to the secure credit our system prosperity. is revenue-neutral to the federal government. By contrast, Gradually today s tax raise code the provides amount of unlimited wages subject tax breaks to payroll only to taxes workers (currently who receive $106,800) over coverage Replaces through the the next complex their 38 years employers, to reach unfair with the tax upper-income 1977 code target with of a workers covering completely receiving 90 percent new tax the of largest system. all wages. tax We break. replace the current Byzantine tax system, including the payroll tax, with a much simpler single-rate For system low-income that minimizes Americans, tax the distortions plan provides perverse direct assistance incentives. coverage, paid with Change the calculation of annual cost-of-living adjustments (COLAs) benefits to reductions in other federal spending. Low-income, able-bodied adults their children currently on more Medicaid accurately would reflect no longer inflation. participate (This is in a Medicaid; technical change instead, that they will would be applied be able in to all Protects America its interests around the globe by ensuring full funding enroll national in private government defense. coverage. Defense programs Meanwhile, is that a core use low-income constitutional COLAs, including individuals responsibility the who indexation of are the not federal of currently tax brackets.) government eligible Medicaid essential would receive to preserving a voucher. American This ensures liberty that prosperity. everyone who Waste needs it inefficiency receives assistance should in purchasing be rooted Slightly out, health but reduce insurance. the resulting the growth savings benefits should compared be used to meet current defense law needs. approximately the top The Creates Heritage a plan health transms care system the remainder that is afdable of today s both Medicaid the program nation the individuals frail, elderly, disabled into families. We a health replace care the safety-net Obama rem program with rather a system than that today s fosters catch-all, individual patchwork choice, competition, state innovation to control underlying health costs while assuring 56

4 program. In addition, we replace the open-ended federal-state financing arrangement ü There are with various a more approaches to ach consistent sustainable capped allotment. In exchange the capped allotment, rem states the shared financing arrange given much more flexibility to redesign health services the disabled the elderly poor so governments, which has led to gam that they can provide better more integrated services at lower cost. health care costs. Through a federa Other spending responsibilities between the federal fully finance administer its sele Under the Heritage plan, non-defense discretionary spending appropriated Saving the American programs This will such Dream: restore as incentives The Heritage cost eign aid, K 12 education, transportation, health research, housing, community spending development, growth. Restore Pr veterans health care, which today account 4.5 percent of GDP is reduced to 2 percent of The Heritage Fou GDP by These rems will reduce the burden of government, empowering families Stuart Butler, Alison Frase entrepreneurs boosting prosperity. Antipoverty spending is scaled back to its 2007 level, adjusted inflation. ü Agriculture Cap awards noneconomic p education programs are structurally remed, highway America spending must is devolved change to course. the states. We face a staggering fi The central goal defense is to guarantee national security of as our prudently nation. ü Unless Start economically we large-scale act wisely, as testing massive of systemic spendin possible. With improvements in efficiency, we estimate that foundations defense needs of our will that economy require conm spending to darken accepted the guidelines America approximately 4 percent of GDP the eseeable future. But this grim future administrative is not inevitable. proceedings The Heritage to resol fi debt spending with rems that are consistent w TAX REFORM deeply held American values. Help reduce long-term health care spendin A stronger economy plays a vital role in improving federal finances. The plan It does diabetes, means this sustained, by heart cutting disease, normal government cancer, down stroke to siz levels of tax revenues. It also reduces the number of Americans through who fundamental need manufacture help because tax rem, importation they are transming of beverages en temporarily distressed as a result of unemployment. A stronger economic economy syrup. security with better without wages passing along a crushing f more jobs is also the most powerful antidote to persistent poverty, plan achieves less the poverty following: reduces the dems anti-poverty spending. Thus, tax rem to spur economic growth is a critical The Task Force plan accommodates a perm component of the Heritage plan. Balances the federal budget in 10 years ke mechanism that currently requires unrealis 18.5 percent of GDP. Americans have made clea A Unified Single Tax Rate. The Heritage tax rem plan builds much on previous they which are Congress well-known willing to has pay been tax annually government. delayin We rem proposals. The Heritage plan replaces today s individual corporate income tax systems eliminates the estate tax. In lieu of the current array SOCIAL Reduces of taxes, SECURITY the our debt plan to institutes 30 percent a of GDP within simple, single-rate tax on individuals businesses. It also folds falling today s thereafter. federal payroll Lower taxes debt will remove the th Social Security Medicare into the single-rate income tax. confidence In In addition, order to of guarantee citizens, replaces investors, that all Social Security lenders. can It wp federal excise taxes except those dedicated to specific trust funds. future generations help to secure our prosperi Gradually raise the amount of wages subje A Simplified System. The basic structure is simple. With its single Replaces rate, the it the next taxes complex 38 unimly years to reach all unfair the tax 1977 code target witho income sources that are spent on consumption. This means that the taxable current income Byzantine includes tax all system, labor including the p compensation, net withdrawals from savings investment accounts, system that net minimizes borrowing. tax distortions pervers Change the calculation of annual cost-of-li Encouragement of Savings. The net amount put aside in savings is subtracted more accurately from income reflect to inflation. (This is a Protects America its interests around the g determine net taxable income. Thus, the more individuals or families national save, government defense. the lower Defense programs their taxes; is that a core use constitutiona COLAs, inc they pay tax on savings only when savings are used to pay goods essential services. to preserving American liberty be rooted Slightly out, but reduce the resulting the growth savings benefits should com be Few Deductions or Credits. Under this plan, the individual income tax has only three deductions instead of the legion of deductions under current law. Creates a health care system that is afdable families. We replace the Obama rem with competition, state innovation to control unde 57

5 Higher education. ü There As are higher various education approaches is a to m achieving of savings these savings. investment One option in human would be to capital, a deduction rem is the allowed shared financing tuition arrangement expenses between higher the education federal up to state the average annual cost at governments, a four-year public which college has led or to university. gaming of the matching payment system rising Charitable donations gifts. As per current law, gifts to nonprofit organizations are taxdeductible if the organizations are recognized as tax-exempt tax purposes. Gifts to responsibilities between the federal government the states, so that each will individuals fully transfers finance through administer inheritance its are selected deductible components to the donor of the but Medicaid become program. taxable Saving the American to the recipient This when will Dream: spent restore on consumption. incentives The Heritage Thus, cost containment, Plan to fix the there is no estate slow Debt, tax in future Cut our tax program Spending, rem. spending growth. Restore Prosperity Mortgage interest. Under current The law, Heritage homeowners Foundation can deduct mortgage interest while the lender continues to be taxed Stuart on Butler, mortgage Alison interest Fraser, income so Bill Beach it is taxed once. Our plan does give homeowners the option of egoing the deduction, in which case the lender is not taxed on mortgage ü interest Cap awards income. Market noneconomic pressure would punitive encourage damages the lender medical to offer malpractice. a lower mortgage interest rate in this case. America must change course. We face a staggering fiscal problem that threatens the very future of Protecting our nation. Low-Income ü Unless Start we large-scale act Seniors. wisely, testing For massive Medicare-eligible of systemic spending rems, senior surging including citizens, public safe the debt calculation harbors will destroy of practices the foundations taxable income of our in that the economy Heritage conm to plan darken accepted is modified the guidelines, American to ensure dream specialized that the our income-adjusted, malpractice children courts, grchildren. flat benefit But amounts this grim Social future administrative Security is not inevitable. proceedings the Medicare The Heritage to defined resolve fiscal contribution disputes. plan will solve are tax-free. America s Today, twin part crises of of debt the Social spending Security with benefits rems of even that modest-income are consistent with seniors the principles is taxed. Thus, of democratic lower-income governance seniors will deeply no longer held be American pushed back values. Help reduce long-term into health poverty care by spending the tax system. to treat During obesity-related the lengthy illnesses including transition period the Heritage plan s Social Security rem, some seniors above certain incomes with The relatively plan does diabetes, high this benefits by heart cutting disease, will pay government cancer, tax on part down stroke by of those to size, benefits, re-energizing imposing an but they American excise tax will pay less enterprise on the than most do through today. Thus, fundamental manufacture our plan tax includes rem, importation important transming of senior-specific beverages entitlement sweetened features. programs with sugar to or provide high-fructose real corn plan We achieves gradually the following: end the taxation of Social Security benefits. Seniors protected from poverty by the Social The Security Task Force plan Medicare accommodates rems will a permanent no longer fix be to placed the sustainable at risk by losing growth some rate (SGR) Balances benefits through the federal taxation. budget in 10 years keeps it balanced ever at no more than mechanism that currently requires unrealistic automatic cuts in physician payments, 18.5 percent of GDP. Americans have made clear to Washington over many decades how much Encouraging they which are Congress seniors willing to to has stay pay been in annually the government. delaying. workce longer We keep is important it at that level. both their own financial security the health of the economy. To achieve this, the first $10,000 of a senior s SOCIAL Reduces SECURITY wages the salary debt is to excluded 30 percent from of tax. GDP This within provision 25 years is especially puts important it on track to low-income continue falling middle-income thereafter. Lower seniors. debt will remove the threat of financial crisis restore the confidence In order to of guarantee citizens, investors, that Social Security lenders. can It will pay also benefits sharply the reduce next the 75 debt years burden beyond: Taxation future of generations Businesses. The help tax to on secure businesses our prosperity. is a simple levy on domestic net cash flow, meaning that Gradually taxable raise income the is amount domestic of wages receipts subject minus to all payroll business taxes costs. (currently It excludes $106,800) all over eign-source Replaces the the next income, complex 38 years which to reach is unfair taxed the in tax 1977 the code eign target with of jurisdictions a covering completely 90 according percent new tax of to system. all their wages. laws We replace systems. the current All other Byzantine special tax provisions system, including credits the in payroll existing tax, law with are repealed a much simpler except single-rate the Alternative system that Change Simplified minimizes the calculation R&D tax tax distortions credit. perverse incentives. of annual cost-of-living adjustments (COLAs) benefits to more accurately reflect inflation. (This is a technical change that will be applied in all The Protects business America tax is also border-adjustable, its interests around which the levels globe the by playing ensuring field full between funding eign government programs that use COLAs, including the indexation of tax brackets.) domestically national defense. produced Defense goods is a services. core constitutional Specifically, responsibility the business of tax the is federal lifted from government exports levied essential on imports, to preserving normalizing American tax levels liberty between prosperity. countries. Waste inefficiency should be rooted Slightly out, but reduce the resulting the growth savings benefits should compared be used to meet current defense law needs. approximately the top Family businesses 25 percent especially of beneficiaries. will helped by the tax rem. Thanks to the tax treatment of savings Creates gifts, a health proprietors care system investors that is afdable will have a both greater incentive the nation to build up individuals capital enterprises. families. And owners We replace will be the able Obama to grow rem their with businesses a system without that fosters worrying individual about choice, whether competition, state innovation to control underlying health costs while assuring 58

6 their heirs will have to deal with the estate tax, which is repealed. ü There are various approaches to ach rem the shared financing arrange Tax Rate. The tax system is designed to raise a permanent revenue stream of up to 18.5 percent governments, which has led to gam of the economy as measured by GDP. The single rate is adjusted periodically so that it achieves that level of revenue. health care costs. Through a federa responsibilities between the federal We estimate that the individual business tax rate needed will likely be between fully finance 25 percent administer its sele 30 percent, but this is comparable to or significantly below Saving the typical the American rate This facing will an Dream: restore incentives The Heritage cost individual or family today. The reason this is that a working family today spending not only pays growth. Restore Pr federal income tax at rates of between 10 percent 35 percent, but also is subject to a The Heritage Fou combined 15.3 percent payroll tax rate on all or most of their compensation. Stuart Butler, Alison Frase Thus, the new tax system offers individuals families a comparable or lower tax rate vastly improves their savings incentives to build wealth ensure their own ü Cap financial awards security. noneconomic p It simultaneously improves the ability of the economy to raise America wages must provide change more course. job We face a staggering fi opportunities. of our nation. ü Unless Start we large-scale act wisely, testing massive of systemic spendin foundations of our that economy conm to darken accepted the guidelines America BUDGET PROCESS But this grim future administrative is not inevitable. proceedings The Heritage to resol fi debt spending with rems that are consistent w Today s budget process does little to facilitate sound fiscal rem deeply in held many American ways actually values. impedes good bold policy. The focus on just 10 years diverts lawmakers Help reduce from dealing long-term with health care spendin mounting long-term challenges, such as retirement programs. The The plan lack does diabetes, of firm this by budget heart cutting disease, controls government cancer, down stroke to siz encement procedures also makes fiscal discipline very through difficult. fundamental manufacture tax rem, importation transming of beverages en economic syrup. security without passing along a crushing f In the Heritage plan, we change the budget process to impose plan enceable achieves the caps following: order to reduce total federal spending (including entitlement programs) to 18.5 percent of GDP by 2021 then The Task Force plan accommodates a perm keep spending at that level. Within those overall caps we also cap Balances non-defense the federal discretionary budget in 10 years ke spending at 2 percent of GDP. Anti-poverty spending is also capped, as mechanism described that above. currently requires unrealis 18.5 percent of GDP. Americans have made clea much they which are Congress willing to has pay been annually government. delayin We We also propose amending existing federal laws that provide permanent or indefinite appropriations federal agencies or programs (including entitlement SOCIAL Reduces programs), SECURITY the debt to or 30 that percent allow of GDP within agencies or programs to spend funds they receive from fees or otherwise falling thereafter. rather than Lower depositing debt will remove the th them in the U.S. Treasury, so as to retrieve congressional control confidence of In spending. order to of guarantee citizens, Within our investors, that Social Security lenders. can It wp specific rems Medicare Medicaid we also include a fixed future budget generations amount help each to secure our prosperi program. Gradually raise the amount of wages subje Replaces the the next complex 38 years to reach unfair the tax 1977 code target witho To make the budget process more visible, understable, accountable the current Byzantine to the American tax system, including the p people, we require Congress to estimate publish the projected system cost that over minimizes 75 years of tax any distortions pervers proposed policy or funding level each significant federal program. Change the calculation of annual cost-of-li more accurately reflect inflation. (This is a Protects America its interests around the g CONCLUSION national government defense. Defense programs is that a core use constitutiona COLAs, inc essential to preserving American liberty Today, we face a daunting task. We struggle with huge federal deficits be rooted Slightly in out, the near but reduce the future resulting the growth savings benefits should com be huge levels of spending debts in the future. There are two visions of how to address this challenge. One would make few changes in rapidly exping programs Creates a while health increasing care system taxes, that is afdable increasing the size of government threatening our economic future. families. The other, We replace which the we Obama rem with competition, state innovation to control unde 59

7 share, is to curb ü the There growth are various of spending approaches so that a to remed achieving federal these savings. government One can option operate would be to deficit-free at the rem size that the Americans shared financing have been arrangement prepared to between finance. the federal state governments, which has led to gaming of the matching payment system rising Fixing the deficit debt problem means that we must ask ourselves tough questions about how we can allocate public funds in the most effective way. We must acknowledge that everyone will need to pitch in to responsibilities solve the problem. between We must the federal ask parents government grparents the states, to think so that not each just of will their own immediate fully situations, finance but administer also of the its financial selected consequences components that of the their Medicaid children program. grchildren Saving the will American This have will to endure Dream: restore if incentives today s The Heritage adults cost are containment, Plan not prepared to fix the to re-evaluate slow Debt, future Cut whether program Spending, they need everything that spending has been growth. promised Restore them. The Prosperity money is simply no longer available to pay all of the promised benefits. That The is an Heritage indictment Foundation against Washington, but it is also a fact one that Rem we are medical now ced Stuart malpractice to Butler, address. Alison Fraser, Bill Beach laws: The good news is that we can do this. We can guarantee economic security to middle-aged older Americans ü even Cap awards as we reduce noneconomic the crippling debt punitive that we damages have piled onto medical the shoulders malpractice. of America the young. must To do change this, course. we must We reduce face the a staggering size of the fiscal federal problem government that threatens focus the it very on future of perming our nation. its ü Unless core Start responsibilities we large-scale act wisely, testing effectively massive of systemic spending efficiently. rems, surging And including public we must safe debt not harbors will allow destroy taxes practices the to foundations drift higher of our higher that economy conm as a proportion to darken accepted of the the guidelines, American economy. dream specialized Instead we our malpractice must children rein in courts, taxes grchildren. rem But the tax this system grim future to foster administrative is not both inevitable. faster proceedings growth The Heritage to greater resolve fiscal economic disputes. plan will freedom. solve America s twin crises of debt spending with rems that are consistent with the principles of democratic governance deeply held American values. The Heritage Foundation Help reduce long-term health care spending to treat obesity-related illnesses including The Percent plan of does diabetes, GDP this by heart cutting disease, government cancer, down stroke by to size, re-energizing imposing an American excise tax enterprise on the through fundamental manufacture tax rem, importation transming of beverages 2021 entitlement sweetened programs with sugar to 2035 or provide high-fructose real corn plan Revenues achieves the following: Spending The Task Force plan accommodates 18.1 a permanent fix to the sustainable 17.7 growth rate (SGR) Balances the federal budget in 10 years keeps it balanced ever at no more than Deficit (-) mechanism that currently requires 0.2 unrealistic automatic cuts in physician 0.8 payments, 18.5 percent of GDP. Americans have made clear to Washington over many decades how much they which are Congress willing to has pay been annually government. delaying. We keep it at that level. Debt Held by the Public SOCIAL Reduces SECURITY the debt to 30 percent of GDP within 25 years puts it on track to continue falling thereafter. Lower debt will remove the threat of financial crisis restore the confidence In order to of guarantee citizens, investors, that Social Security lenders. can It will pay also benefits sharply the reduce next the 75 debt years burden beyond: future generations help to secure our prosperity. Gradually raise the amount of wages subject to payroll taxes (currently $106,800) over Replaces the the next complex 38 years to reach unfair the tax 1977 code target with of a covering completely 90 percent new tax of system. all wages. We replace the current Byzantine tax system, including the payroll tax, with a much simpler single-rate system that minimizes tax distortions perverse incentives. Change the calculation of annual cost-of-living adjustments (COLAs) benefits to more accurately reflect inflation. (This is a technical change that will be applied in all Protects America its interests around the globe by ensuring full funding national government defense. Defense programs is that a core use constitutional COLAs, including responsibility the indexation of the federal of tax brackets.) government essential to preserving American liberty prosperity. Waste inefficiency should be rooted Slightly out, but reduce the resulting the growth savings benefits should compared be used to meet current defense law needs. approximately the top Creates a health care system that is afdable both the nation individuals families. We replace the Obama rem with a system that fosters individual choice, competition, state innovation to control underlying health costs while assuring 60