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How Mitt Romney's new plan would change Social Security and Medicare

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Among the elements in Romney’s plan:

  • Cap federal spending at 20 percent of gross domestic product (it was 24.3 percent last year), which would require spending cuts of approximately $500 billion per year in 2016, assuming the economy grows about about 4 percent annually. (The US grew by 2.8 percent in 2010.) The plan would also reverse defense cuts in Obama administration budgets.
  • Cut nonsecurity discretionary spending to below 2008 levels by cutting such spending 5 percent across the board.
  • Privatize Amtrak, saving $1.6 billion.
  • Reduce subsidies for the National Endowments for the Arts and Humanities, the Corporation for Public Broadcasting, and the Legal Services Corporation, saving $600 Million.
  • Eliminate Title X family planning funding that benefits groups like Planned Parenthood, saving $300 million.
  • Reduce foreign aid by $100 million, particularly to countries the US borrows money from, including China.
  • Reduce the federal workforce by 10 percent through attrition, align federal employee compensation with the private sector, and repeal the Davis-Bacon Act, which, according to Romney, “forces the government to pay above-market wages, insulating labor unions from competition and driving up project costs by approximately 10 percent.”

On Social Security, Romney would “gradually raise the retirement age to reflect increases in longevity and slow the growth in benefits for higher-income retirees.”

Similarly, Romney indicates a gradualism on Medicare.

“First, Medicare should not change for anyone in the program or soon to be in it,” he said in his speech Friday. “We should honor our commitments to our seniors.”

“Tomorrow’s seniors should have the freedom to choose what their health coverage looks like,” he continued. “Younger Americans today, when they turn 65, should have a choice between traditional Medicare and other private health-care plans that provide at least the same level of benefits ... as with Social Security, the eligibility age should slowly increase to keep pace with increases in longevity.”

Many of the details in Romney’s plan are yet to be revealed, but his political competitors were quick to weigh in.

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