, Salem, MA


April 25, 2013

Watson: A grand bargain requires compromise, fairness


Former Secretary of Defense Robert Gates has estimated that 30 percent of military spending is consumed by unnecessary overhead costs. It will be difficult, but very possible, to improve our procurement, contract administration and budgeting processes to better utilize our tax dollars.

Another significant percentage of military budget savings could be had by improving the firewall between the military’s internal needs analysis and political meddling. Right now, we have a system where every senator and congressman feels obligated to advocate for the highest-possible military spending that can be garnered for his state. We need to use mechanisms — like instituting one base-closing or lost contract in each state simultaneously — so that both politicians and citizens can rise above business as usual.

With regard to Social Security — now solvent to 2036 — we can extend its viability beyond that date by removing the income ceiling (now set at $113,700) beyond which no payroll tax applies. Additionally, we can add more means-testing to various benefits, and we can consider means-testing the retirement age.

Medicare and Medicaid today constitute about 23 percent of the federal budget, and because health care costs overall (public and private) are escalating at inordinate rates, there is great potential for reforms and savings. Part of the answer lies in Obamacare, which includes many measures and incentives designed to reduce the costs of medical care delivery. Several reputable studies have concluded that, possibly, one-third of our public and private health care spending is wasteful and does nothing to improve the quality of care.

So, in addition to Obamacare, there is still room to reduce the share of our GNP devoted to health care. More “accountable care” models, more patient responsibility for cost-consciousness, more competition among hospitals and doctors, and a range of other adjustments (such as halting Medicare payments that indirectly support medical education), are possible.

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