Joseph Antos, Andrew Biggs, Alex Brill, and James Capretta of the American Enterprise Institute have developed a plan balancing American economic growth with future fiscal stability.

Our plan seeks to achieve long-term fiscal stability and promote economic growth by aligning federal spending and revenue and pursuing market-based policy reforms. The plan reduces the national debt by over $60 trillion in 2054. In that year, debt as a share of the economy would drop significantly, from 166 percent of GDP in the baseline to about 85 percent of GDP as a result of the proposed reforms. More stringent spending policies could cut the debt further, but there is no easy or quick solution to the country’s fiscal challenges.

The plan emphasizes savings in the major entitlement programs — Social Security, Medicare, Medicaid, and health insurance subsidies — while continuing to protect those less fortunate. The plan raises the same revenue (in present discounted value across the 30-year horizon) as the current law baseline, resulting in a revenue level above historical averages, as a share of GDP. The plan reforms the income tax by broadening the base and reducing statutory rates to promote economic growth. …

… 1. Make Healthcare Programs More Efficient

Incentives, rather than controls, would be used to promote greater efficiency while allowing patients and their healthcare providers to make the best individual decisions within a responsible budget framework. All subsidies would be reformulated to provide greater support to those with greater financial need or higher health risks. …

… 2. Better Target Social Security

The current Social Security benefit formula would be replaced with a means-tested benefit for all retirees and widow(er)s, regardless of their earnings history or labor force attachment. The benefit would equal 28 percent of the national average wage for single retirees and 41 percent of the average wage for couples. To supplement this flat benefit, workers would be automatically enrolled in employer-sponsored retirement plans with a default contribution of 3 percent of earnings, split evenly between the worker and employer.