1. Parametric Social Security and Medicare reforms: Raise the age of eligibility to 67 over 10 years and then peg the age to life expectancies.
2. Index changes in Social Security benefits to prices, not wages.
3. The remaining actuarial liability for Social Security--it would be modest once the above changes are implemented--should be closed by an increase in the payroll tax (raising the ceiling to where it had previously been and then pegging that ceiling to nominal wages so that it remains constant, rather than eroding in real terms).
4. Medicare should be subject to means-testing.
5. Introduce continual cost assessment to the Pentagon and other departments. Such a framework would reduce the risk of badly-managed projects such as the Joint Strike fighter program that are now running at more than twice the intended cost per jet, not to mention hobbled by delays. The Pentagon, like any other entity in the federal government, must learn to obtain more value per dollar of spending.
While imperfect, a number of the above concepts have been cited by the IMF (e.g., parametric reforms to mandatory spending programs), Bowles-Simpson, GAO, among others. Those changes would represent a meaningful start to fiscal consolidation. Neither Senator Toomey nor the two Congressmen I mentioned in the message to which you have referred have introduced legislation to address Social Security's and Medicare's imbalances. None of them offered fiscal cliff legislation that would have dealt with spending-related issues.
Finally, it should also be noted that comprehensive health reform that addresses supply-side and demand-side issues, including cost drivers, would be necessary to make the nation's health care system financially sustainable. Its costs cannot increase perpetually at a multiple of GDP as currently remains the case. Foreigners are not likely to subsidize the nation's health care imbalances indefinitely via deficit funding.