Home » Entitlement spending fix will require Medicare eligibility age hike, means testing and CPI formula change, McConnell says

Entitlement spending fix will require Medicare eligibility age hike, means testing and CPI formula change, McConnell says

By Mark Green
The Lane Report

U.S. Sen. Mitch McConnell speaks at the Commerce Lexington Public Policy Luncheon on Friday, Jan. 18, 2013, in Lexington, Ky., at the Hyatt Hotel. Photo by Mark Turner, Commerce Lexington

America must raise the eligibility age for its Medicare entitlement to rein in spiraling federal spending or face the demise of the U.S. social safety net and the future strength of the nation itself, U.S. Sen. Mitch McConnell warned Friday.

“It’s the mega issue of our time,” he told a Commerce Lexington Public Policy Luncheon audience of 225. “The goal is to save the country. This is the big one.”

It is a national security threat that exceeds all others in the view of the military Joint Chiefs of Staff, a problem worse than international terrorism, McConnell said.

With the national debt at $16.4 trillion – equal in size to the annual U.S. economy – the Senate minority leader said the United States is far down the road Europe has taken toward economic crisis due to generous and unaffordable entitlement programs for aging citizenries. He repeatedly invoked the example of Greece, the European nation in the worst debt problem.

When he stopped in Italy this week an international trip, McConnell said he was told a national debt level there of 130 percent of GDP had created a sustained crisis. The U.S. debt level, he warned, has hit 100 percent of GDP after increasing $6.5 trillion the past four years.

“Until you make the major entitlement programs fit the demographics of the country, you cannot fix the problem,” he said. “There is not enough revenue.”

Life expectancy today for Americans is 79 for men and 81 for women, said McConnell, who was elected to the Senate in 1984 and is Kentucky’s longest serving senator.

McConnell said an effective Medicare entitlement fix will require three essential elements:

Raising the eligibility age – “You gradually enact it,” he said. Those currently at or nearing Medicare eligibility will not be affected. “It’s your kids and your grandkids” who will feel the change. “It’s not you,” he told his audience, the great majority of whom sported at least a little gray hair.

Means testing – Wealthy seniors do not need Medicare safety net benefits and this should be recognized in the program’s administrative policy.

COLA formula reform – Present calculation of the Consumer Price Index that is used to adjust payments for Medicare and other federal programs “dramatically overstate inflation,” McConnell said. To correct this, the CPI formula should be shifted from wage-based to price-based.

McConnell says he is a compromiser

“I don’t believe compromise is a bad word,” McConnell said, pointing out his involvement in the three major political deals reached in Washington during the Obama administration, including an 11th-hour agreement he negotiated with Vice President Joe Biden to resolve the so-called fiscal cliff crisis on New Year’s Eve.

The U.S. Constitution is the product of “a series of significant compromises” by its negotiators, he noted.

McConnell positioned himself apart from the far-right tea party wing of the Republican caucus in Washington. He scoffed that there were members of his party dissatisfied with the recent fiscal cliff deal that preserved 99 percent of the Bush tax cuts.

“No action means the demise of the safety net,”

In a “good compromise,” McConnell told the Central Kentucky business audience, both side are uncomfortable with the final result and both sides feel like they got something.

Only a bipartisan solution can achieve a lasting and effective resolution, he said.

According to the Senate minority leader, the responsibility for reaching a political compromise in a divided government rests with President Obama because only a president can sign a deal into law and deliver his party’s back.

“Divided government is the best time to do tough stuff,” he said.

Divided government has produced some of Washington’s biggest compromises, McConnell noted, pointing to welfare reform in the 1990s by President Clinton and a Republican House and Senate, and to Social Security program reforms 30 years ago achieved by President Reagan and House Speaker Thomas “Tip” O’Neill.

Some parts of the two-year increase in the Social Security initial benefit eligibility age enacted in the ’80s are continuing to come in effect today.

“I’m ready to do it,” he said of a new fiscal fix for the federal budget. “I’ve been ready to do it” since the Obama administration began four years ago.

Expanding the context to the entire federal government, McConnell said he thinks it is realistic to pursue achieving a balanced budget within 10 years.

“I am endlessly optimistic about this country’s ability to address its problems,” said in closing, after suggesting that the overall tone of his remarks might be viewed as too dire and foreboding.

McConnell was very encouraging also about the future of Afghanistan, which he has just returned for a seventh time, and that war-torn country’s prospects after U.S. troops withdraw at the end of 2014.

This seventh visit, he said, for the first time had left him confidently optimistic that the United States “will achieve what we went there to achieve.” The generals and leaders he spoke now feel sure there is no prospect Afghanistan will revert to Taliban control.

“The Afghan army can handle their internal threats,” McConnell said. “All our leaders over there believe the Afghans can handle it” and prevent their country from ever again becoming “a launching pad for people who want to kill us.”

Improving education levels have been an important change. U.S. troops found military personnel who were mostly illiterate when they arrived in in late 2001, but that is different after a decade in which Afghan schools have been full.

“They do know how to fight,” McConnell said, “and they will be able to handle the Taliban.”