4 Innovative Budget Fixes That No One is Talking About

As the March 1 deadline to avert the sequester approaches, policymakers and politicians continue to butt heads in DC. So far, it seems they have been unable to find common ground to propose solutions that address the country's growing budget and deficit problem. Here are four innovative budget fixes that should be considered as they have received some great public support. 

1. Restore payroll tax cap to 90% of earnings

Since 1982, the taxable earnings base for Social Security has increased at the same rate as average wages. However, with increased earnings inequality, the percentage of total covered taxable earnings has dropped from 90% in 1982 to 84% today. The 2013 payroll tax cap is $113,700. While I am not proposing an elimination of the payroll tax cap, it would be worthwhile to consider restoring the cap to hit 90% of all wages covered by Social Security. This would mean a raise on the tax cap to a ceiling around $180,000 and long-term solvency.

2. Phase out direct government agriculture subsidies

Agriculture subsidies cost the U.S. government between $15 to $30 billion per year. Not only is this a recurring annual cost, but it leads to over-consumption of corn-based sugars and primarily benefits a small group of large agribusinesses. Phasing out the current subsidies to help reduce the deficit and promote sustainable, local agriculture would serve as a strong investment in working-class Americans.

3. Restart conversations about climate change and introduce an upstream carbon tax

Climate change is an issue that can no longer be ignored. In his State of the Union address, President Obama pledged to deal with climate change to bring about greater energy independence. If no action is taken, young people are positioned to bear most of the costs. However, in order to save our ecosystem and combat climate change for future generations, an upstream carbon tax should replace the federal gas tax. The carbon tax would essentially be a larger version of the gasoline tax, so double taxation would be unfair and unnecessary. Setting a fixed dollar amount per ton of carbon dioxide equivalent, with annual percentage increases at the EPA’s estimate social cost of carbon, would help the U.S. return to responsible emission levels in the long-term.

4. Reform Medicare program by maximizing innovative reimbursement models

With health care costs taking up a large percentage of national GDP and health care reform taking steps to improve access to health care services for millions of Americans, the conversation about cost of health care needs to be addressed. Although innovative payment mechanisms are still being explored, Medicare should jump at the opportunity as a large-scale buyer of health care services to introduce new reimbursement models. Pay-for-performance and bundled payments, although still undergoing experimentation in different health care settings, are two innovative strategies that Medicare should consider introducing to improve provider care coordination and patient quality outcomes.

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Adam Jutha

B.S. Public Health - Health Policy and Management from the University of North Carolina at Chapel Hill. Former member of the Roosevelt Institute | Campus Network. Interests lie in health care policy, international development, and politics.

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