CRF Blog

Entitlements in America

by David De La Torre

In From: Shadow Council of Economic Advisors To: Barack Obama, The Economist proposes a plan to change entitlements in the U.S.

A few first principles for such a plan:

• No steep cuts in the next five years. The recovery is fragile enough as it is. And you can’t spring big changes on people who are about to retire.

• Any reforms should boost the economy’s supply side. Millions of working-age Americans have left the labour force, sapping the country’s economic potential. Most have quit because they cannot find jobs; but too many entitlements give them an incentive to leave.

• The rich should bear the lion’s share of the adjustment, simply because their incomes have grown so much faster than the average in recent decades.

• Don’t be deterred by the political difficulty. Democrats don’t want to touch benefits, and the only thing Republicans hate more than higher taxes is Obamacare. But action is necessary. [more]