Federal spending mandated by our major entitlement programs (Social Security, Medicare, Medicaid) today comprises the majority of the federal budget and will bankrupt the United States absent imminent structural reforms.
Not only do these entitlement programs drain federal spending dollars, but they don’t do a particularly good job of delivering promised services and benefits. Social Security provides a shameful rate of return for most recipients, especially when compared with private sector alternatives. And seniors and the poor are finding it increasingly difficult to find a doctor who will accept Medicare or Medicaid patients.
IPI has proposed specific, concrete solutions that would not only make these programs solvent and sustainable, but also deliver superior benefits. Entitlements should not be reformed solely for the benefit of the federal government, but also for the benefit of taxpayers and recipients.
Retiring the Social Security Earnings Test
A relic of the Great Depression, the Social Security retirement earnings test penalizes people receiving Social Security benefits who work. The earnings test puts a huge tax on wage inome, creating an effective marginal tax rate of between 41 and 80+ percent.
This Issue Brief outlines the case for eliminating the earnings test, and finds that "the long-run costs of eliminating the earnings test are almost nothing."
Let 50 Flowers Bloom: Welfare Reform in the States
Have you ever thought of vacationing in Hawaii and not coming back? Should you decide to do this and be unable to find a job, never fear - you can fare well on welfare. In Hawaii, 88.8 percent of the 'poor' collect welfare benefits rather than seek work--a higher percentage than any other state. Why? Hawaiians can draw up to $664 weekly ($34,528 annually) on a permanent vacation or work for average local wages and earn $476 weekly ($24,752 annually.) Which would you choose? The 'poor' do make rational economic decisions in deciding whether or not to seek work. The success of 'workfare' programs bears this out.
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