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Why does Washington keep putting off entitlement reform?

Both the White House and Republicans agree that entitlement reform is necessary to rein in federal deficits, but nothing ever gets started. That could change in the weeks ahead.

By Staff writer / April 4, 2013

House Ways and Means Committee Chairman Rep. Dave Camp (R) of Michigan attends a hearing on Capitol Hill in Washington last year. His committee will be key to entitlement reform.

J. Scott Applewhite/AP/File



When President Obama visited with House Republicans last month, Rep. Dave Camp of Michigan had a question: Why not move ahead with the entitlement changes that both parties agree on right away?

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Because, Mr. Obama reportedly said, nothing is happening on entitlements without new tax revenues.

That’s the same standoff the parties have faced for all of the Obama administration. But the debate may get a fresh injection of specifics from both sides as Washington appears ready for another round of “grand bargain” derring-do this summer as the government again approaches its debt limit.

From the Democratic side, the White House is expected to release a long-awaited budget plan next week that will likely offer details on what the president wants as new tax revenue. While Senate Democrats passed a budget plan last month that asked for $975 billion in new revenue, it proposed only a general plan to eliminate tax breaks and deductions that benefit the wealthy.

On the Republican side, Representative Camp announced this week that the Ways and Means Committee, which sets tax policy and of which he is the chairman, will begin a series of hearings on the points of agreement between Obama and the GOP conference on entitlement reform.

“The president has repeatedly called on Congress to act on policies we can agree on, and he has stated that we should not let our differences get in the way of making progress. Given the bipartisan support for various reforms to these programs, there is no reason we cannot roll up our sleeves and get this done,” Camp said in a statement.

It is an intriguing move and a “great idea,” says Pete Davis of Davis Capital Investment Ideas.

The hearings could unstick the debate by starting a conversation about what is really necessary to make a solution possible. “Those things are going to be part of a super deal if the 2 percent chance of a super deal ever comes true,” says Mr. Davis.

What will the Ways and Means Committee be talking about?

One idea is to adopt an index called “Chained CPI” for adjusting government benefits including Social Security. The index rises more slowly than the current cost-of-living adjustments based on inflation because it assumes consumers will be able to shift some spending from goods with rapidly rising prices to similar goods with lower price tags.

There will also be hearings on the potential to raise the Medicare eligibility age, cut Medicare’s subsidies for wealthier seniors, and adjust coverage for Medicare’s insurance and prescription-drug coverage.


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