October 30, 2012

WHICH ONE WILL PUSH THE TRANSITION FROM DEFINED BENEFIT TO DEFINED CONTRIBUTION THE FURTHEST THESE NEXT FOUR YEARS?:

The Promise of a Romney Presidency (Ramesh Ponnuru Oct 29, 2012, Bloomberg)

Romney has been disappointingly vague about his health-care plans. But if elected, he will face enormous pressure to deliver on his promise to repeal Obama's health law, and legislation to that effect is unlikely to succeed unless Romney couples it with a conservative alternative. It is easy to picture what that would look like: Its most important feature would be a change in the tax treatment of health insurance to restrain costs and increase access.

Even if Romney fails to replace the health law, he can be expected to moderate it. The Obama administration's regulation forcing almost all employers to cover contraceptives -- even those that some employers reject as abortion drugs -- would go. The U.S. would remain a country where access to contraception is easy, but also one that respects the autonomy of religious institutions.

-- The budget. Raising taxes on high earners would narrow America's future deficits a bit, while also reducing economic growth. For the most part, though, closing the fiscal gap is a question of how much to raise middle-class taxes, how much to reduce the growth of middle-class benefits, and how to go about doing both.
I would prefer to do all the work on the spending side of the budget. There's a paternalistic case for taking some money from the middle class and giving it back later. That way, nobody ends up destitute through foolish choices or bad luck. That case has a built-in limit: We shouldn't raise people's taxes in order to give them back even more money than needed to avoid poverty.

But enacting deficit reduction might require a bipartisan deal, and thus a compromise that raises taxes and cuts spending. The compromise will probably look better if Romney is president because those who want to keep taxes and spending down will have more bargaining power.

That is partly because Romney has taken the wiser position on entitlements. He believes the growth of Social Security benefit levels should be restrained, especially for affluent retirees, to match the program's revenue. He wants to let health-insurance plans compete for Medicare recipients' business on the theory that it will improve the quality of care and restrict costs. These steps may not be sufficient to the challenge of rising entitlement expenses -- the U.S. also probably needs to change benefit levels for today's Medicare recipients, something both candidates are denying -- but they would vastly improve our long-term fiscal health.

Posted by at October 30, 2012 4:30 PM
  

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