I wonder - will the compromise involve greater government spending?
The problem will be solved by future Democrat administrations. After 2016 we will have passed the demographic tipping point which will ensure Democrat majorities in federal elections. In addition to higher taxes funding of Medicare and Social security will be handled as follows:
1). Means testing. If you have assets from savings you will be denied benefits or receive reduced benefits. Feds will begin requiring you to report assets annually with your tax return.
2). Increase age to be eligible for benefits. Age 65 for “early retirement”’ age 70 for full retirement. It will not matter that jobs won’t exist or some will not be healthy enough to work.
3). Denial of life extending and quality of life improving medical care past age 75. The healthcare system policies will be designed to shorten the life span of “non productive” elderly citizens.. To paraphrase Obama, “you may get a pain pill instead of a hip replacement.”
4). Aggressive “end of life counseling” and widespread euthanasia. A society that aborts children will easily justify putting to death the sick elderly. Likely bureaucrats will have the authority to arbitrarily deny services to the critically I’ll, particularly if there is no family member advocate. No doubt these bureaucrats, assigned to every hospital, will have newspeak titles such as “Patients Rights Administrator”.
5). Confiscatory inheritance taxes. Over time the state will end the outdated practice of allowing people to designate where property goes after death by gradually increasing the death tax rate to 100%. Annual filing of asset statements with tax returns will facilitate this process.. At death property ownership will shift to the government to be used for the common good.
6). Value added tax or national sales tax. It will happen within the next 5 years, possibly implemented on a temporary basis at a very low rate (say 2%) to address the overall deficit. With 50% of the population not paying taxes it will be the only way to extract taxes from lower income people. You’ll never get Congress to reinstate income taxes on the “working poor” and despite the rhetoric they will never soak the rich. The only answer to raising tax revenues in a stagnant economy is broadening the tax base. A broadbase consumption tax is easy to implement. Plus it can gradually be raised as required.
The answer to the Medicare and Social Security funding crisis is to reduce the number of recipients. Obamacare is putting in the framework to reduce the life span of senior citizens. Means testing and extending the age of eligibility for benefits will be coming soon and supported by both political parties. The next time the Democrats have majorities in both houses of Congress, and the presidency, they’ll put in the rest of the taxes and take credit for solving the fiscal crisis.