7 Ways to Fix America’s Fiscal Mess

Plus, more problems for the F-35 By Yuval Rosenberg and Michael Rainey 7 Ways to Fix America’s Fiscal Mess Tackling the $22 trillion national debt can be done in very different ways. Underscoring that point, the Peter G. Peterson Foundation, a non-profit, non-partisan organization focused on increasing awareness of America’s fiscal outlook, asked seven think tanks from across the ideological spectrum to develop 30-year budget plans that both satisfied the groups’ various policy agendas and improved the country’s debt picture. The revenue projections in the plans were scored by the Tax Policy Center and the spending effects were reviewed by a former Congressional Budget Office official. The plans were released Tuesday as part of the Peterson Foundation’s annual Fiscal Summit in Washington, D.C. (The Fiscal Times is an editorially independent site founded and funded by Peter G. Peterson and his family.) The seven policy groups proposing plans were the American Action Forum, the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, the Manhattan Institute and the Progressive Policy Institute. Here’s a quick summary of the seven plans. All of the plans rein in the projected growth of the debt to a greater or lesser degree, but they present profoundly different views of how big the government should be and how it should tax and spend. On health care, the three think tanks on the right (AAF, AEI and the Manhattan Institute) propose to convert Medicare to a “premium support” model in which seniors would get subsidies to buy private insurance. They also propose setting limits on Medicaid payments or otherwise limiting federal Medicaid spending through increased competition. The think tanks on the left would expand coverage under Medicare or similar programs and, in some cases, allow the government to negotiate for lower drug prices. On Social Security, the proposals range from raising the retirement age and limiting benefits in various ways to expanding benefits and coverage and increasing taxes to pay for those changes. Five of the seven think tanks propose some reduction in retirement benefits. Four of the seven think tanks call for increasing or eliminating the payroll tax cap, and four of the groups call for raising payroll taxes. Overall, six of the seven groups (with AEI being the exception) would raise Social Security revenues as part of their reforms. On taxes, five of the seven groups would increase individual rates above where the 2017 cuts put them. And four of the seven would raise the corporate tax rate from the 21% set by the Tax Cuts and Jobs Act to between 25% and 35%. Five of the groups would introduce a carbon tax of some sort. The bottom line: The seven plans are detailed and nuanced, and a few lines of summary here can’t do them justice. To read the plans or watch each group’s summary video, go [here](. Number of the Day: $738.6 Billion The U.S. budget deficit grew to $738.6 billion in the first eight months of the current fiscal year — an increase of $206 billion, or 38.8%, over the deficit recorded during the same period a year earlier. Bloomberg’s Sarah McGregor [notes]( that the big increase occurred despite a jump in tariff revenues, which have nearly doubled to $44.9 billion so far this fiscal year. But that increase, which contributed to an overall increase in revenues of 2.3%, was not enough to make up for the reduced revenues from the Republican tax cuts and a 9.3% increase in government spending. Quote of the Day “Listen buddy, we’re not doing a clean debt ceiling. Get a budget caps deal.” – Senate Majority Leader Mitch McConnell, addressing acting White House budget director Russ Vought in an April meeting, as reported today by Politico's Burgess Everett, Nancy Cook and John Bresnahan. Their [story]( details tensions between Republican senators and Trump White House officials including Vought and Acting Chief of Staff Mick Mulvaney, who have urged lawmakers to raise the debt ceiling without a broader agreement to lift spending caps set to kick in for fiscal 2020. F-35 Price Drops, but Serious Technical Problems Remain A Marine Corps F-35 stealth fighter flew low and slow over the White House Wednesday, putting on what ABC News [called]( a “rare, if not unprecedented” show for President Trump and President Andrzej Duda of Poland. The NATO ally has announced that it intends to purchase 32 F-35s to replace the aging Russian warplanes in its inventory. The Polish air force may end up spending less to purchase its new F-35s than it originally anticipated. On Tuesday, the Pentagon [announced]( that it had reached a tentative agreement with Lockheed Martin on a price for the next batch of F-35s, a bulk purchase of 470 jets. The $34 billion agreement — which would be the largest procurement in Pentagon history — would translate to a per unit price below $80 million for the most common variant of the jet, the F-35A. If the agreement is finalized later this summer, the plane will have hit its lower price target a year ahead of schedule, the Pentagon said. It’s not all good news for the world’s most expensive weapon system, however. On Wednesday, Defense News released several new reports detailing serious, ongoing problems with the F-35 program. Issues include difficulties controlling some versions of the jet during combat maneuvers; potential damage to the aircraft’s frame and stealth coating at high speeds; pilots experiencing severe ear and sinus pain in the cockpit; and a lack of reliability in the jet’s cloud-based Autonomic Logistics Information System (ALIS), which is failing to diagnose problems and manage parts inventories. Some of the issues may not be fixed before the F-35 enters full-rate production, Defense News’ Valerie Insinna says. Read what the War Zone’s Tyler Rogoway called “an absolute cluster bomb of stories” about problems with the F-35 at [Defense News](. Martin Feldstein, one of the most influential economists of recent decades, died Tuesday at age 79. "Feldstein was a professor of economics at Harvard University for five decades, an expert on taxes and a leading advocate of supply-side economics. He was a mentor to conservative thinkers and respected by Democrats," CNN says. Bloomberg News notes that Feldstein, who served as chairman of the Council of Economic Advisers under President Ronald Reagan from 1982 to 1984, persuaded the president to cut budget deficits and break a campaign promise not to raise taxes. Send your tips and feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends to [sign up today]( for their own copy of this newsletter. State Health Care Scorecard: Hawaii Tops the List, Mississippi Last A new analysis from The Commonwealth Fund finds that that Hawaii has the best health system in the country. The non-partisan foundation’s 2019 Scorecard on State Health System Performance assesses all 50 states on dozens of health care variables, including access, quality, cost and outcomes. Massachusetts, Minnesota, Washington and Connecticut round out the top five in the rankings. At the other end of the spectrum, Mississippi is again the worst-performing state, with low marks for access and affordability, prevention and treatment, and health outcomes. Oklahoma, Texas, Nevada and Arkansas are also in the bottom five. Some key points from the report: Record number of deaths from suicide, alcohol, and drugs. The U.S. is seeing a rising number of “deaths of despair,” although there are strong regional variations. Opioid addiction is particularly destructive in New England and Appalachia, for example, while alcohol is a bigger killer in the western states. Gains in access to health care have stalled. The number of people lacking health insurance fell sharply after the Affordable Care went into effect, but the numbers have stopped improving in most states. In 16 states, the percentage of uninsured adults rose by one point between 2016 and 2017. Medicaid expansion improves access. The 10 states with the lowest uninsured rates, led by Massachusetts at 4%, expanded their Medicaid programs as allowed by the Affordable Care Act, while the highest uninsured rates were found in states that have not expanded Medicaid. Texas has the highest uninsured rate, with 24% of adults lacking health care coverage. The next four states in that list — Oklahoma, Georgia, Florida and Mississippi — have also not expanded Medicaid. The financial burden of health care is rising everywhere. “Health care costs are the primary driving force behind rising premiums, which are an increasing financial burden to working families in all States,” the report says. Rising costs mean that many families are “paying more for their insurance but getting less.” The report includes estimates of how well the health care system would be performing if all states achieved the top level of performance for each variable. Such an improvement would result, for example, in 18 million more children and adults with health insurance; 11 million more adults receiving cancer screenings; 808,000 more children receiving all recommended vaccines; 6.7 million fewer unnecessary emergency room visits; and 90,000 fewer deaths from treatable diseases for those under 75. News - [After Rebuke from Jon Stewart, Panel Approves 9/11 Victim Bill]( – Roll Call - [Republicans Move for House to Adjourn Over Inaction on Border Crisis]( – Roll Call - [Steny Hoyer Faces Storm Over Congressional Pay Boost]( – Politico - [Bernie Sanders Goes Full FDR in Defense of Democratic Socialism]( – Politico - [McConnell Challenges Democrats to Pass Funds for Migrant Crisis]( – CNN - [Tax Cuts May Not Pay for Themselves, at Least Not Yet, Says GOP Rep. Who Helped Author Bill]( – Newsweek - [Republican Senator Likely to Push Colleagues to Curtail August Recess Again]( – Roll Call - [Romney Says He Has New Plan to Replace Obamacare]( – The Hill - [California Is Shoring Up Obamacare, Even as Trump Is Sabotaging It]( – HuffPost - [‘Cadillac Tax’ Repeal Could Get Floor Action, Thanks to Pelosi’s New Rule]( – Roll Call - [The Trump Administration's Coming Health Care Regulations]( – Axios - [American Medical Association Maintains Its Opposition to Single-Payer Systems]( – Modern Healthcare - [Revenue Growth Overtakes Cost-Cutting as Hospital Executives' Top Priority]( – Modern Healthcare - [Democratic White House Hopefuls Push to Expand Health Care in US Territories]( – The Hill - [Maine Takes Step Toward Allowing Canadian Prescription Drug Imports]( – Bangor Daily News - [Corporate Executives Are Fearing a Recession in 2020, Duke Survey Shows]( – CNBC - [Reps of 22 Foreign Governments Have Spent Money at Trump Properties]( – NBC News Views and Analysis - [Republicans for Redistribution]( – David Leonhardt, New York Times - [Help Is Almost Here for Retirement Savers]( – Steven Rattner, New York Times - [Unsustainable Drug Prices or Access to Medicaid: Pick One]( – Gerard A. Vitti, Morning Consult - [Divergent Pleas for Pay Raise from Veteran Lawmaker and Freshman Hit Political Hurdle]( – Paul Kane, Washington Post - [Trump Has Made It Harder for the Fed to Do the Right Thing]( – Jeff Spross, The Week - [Justin Amash and the Myth of Tea Party Conservatism]( – Matthew Walther, The Week - [Democrats Need Brains as Well as Spine]( – Ed Kilgore, New York - [New SALT Workaround Regulations Narrow a Tax Shelter, but Work Remains to Close it Entirely]( – Carl Davis, Institute on Taxation and Economic Policy - [Five Myths About Perks of Congress]( – Steve Israel, The Hill Copyright © 2019 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. 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