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a bipartisan coalition of people in and out of government has been trying to figure a way out. The outlines of a consensus are emerging. Tax revenue in exchange for entitlement cuts offers the best hope. The challenge is to give each side enough incentive to withstand a backlash from its partisans.
Can it be done? Even Mitt Romney, the Republican party’s presidential nominee, says he might tax the rich more. And Romney recently mused out loud that he would limit taxpayers to $17,000 in deductions; that could mean a hefty tax increase for the rich. With that in mind, here is a suggested 10-year road map:
1. Raise the retirement age to 69 from 66 by indexing it to longevity. Adding one month every two years would bring it to 69 in the year 2075. Eligibility for Medicare benefits should also rise.
2. Require more Medicare cost-sharing. Congress could discourage overuse by increasing deductibles and co-payments. It could also means-testing.
3. Shrink cost of living adjustments.
4. Raise taxes on the wealthy. The Bush tax cuts should be allowed to lapse for households earning above $250,000.
5. End corporate tax breaks.
6. Overhaul other government programs.
These actions would yield two-thirds of what is needed.
Read More: BW