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The dramatic recommendations laid out today by President Obama's debt commission -- to slash spending and eliminate popular tax deductions -- are merely a draft proposal by the commission co-chairs, but they underscore the scope of changes required to bring the deficit back to acceptable levels.
As co-chair Alan Simpson, a former GOP senator, put it: "We have harpooned every whale in the ocean and some of the minnows."
The recommendations:
-- Social Security: smaller cost of living benefits, a gradual increase in retirement age, higher payroll taxes for upper-income Americans.
-- Dramatic tax reform: to broaden the base and lower rates, while wiping out or scaling back most tax breaks, including reducing the mortgage deduction
-- Significant spending cuts in almost all functions of government.
Something of this magnitude is expected to be dead on arrival with most Democratic and Republican elected officials on the commission, who oppose either the spending cuts or tax increases. Still, the commission has until Dec. 1 to try to reach agreement on something -- perhaps a more limited set of spending cuts.
Indeed, as the New York Times notes, "Should the package of proposals fall short of the necessary 14 votes in the deficit commission [out of 18], as many people expect, proponents of deficit reduction, including some administration officials, hope that at least some of its recommendations could be the basis of efforts to pare deficits once the economy fully recovers."
*** UPDATE *** White House spokesman Bill Burton offers this response to the recommendations: "The President will wait until the bipartisan fiscal commission finishes its work before commenting. He respects the challenging task that the Co-Chairs and the Commissioners are undertaking and wants to give them space to work on it. These ideas, however, are only a step in the process towards coming up with a set of recommendations and the President looks forward to reviewing their final product early next month."
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Unfortunate that neither side seems to be willing to even entertain the thought of this proposal. I'm not a fan of all of the proposals, but it doesn't sound too bad. I've yet to see detailed info though.
Maybe it's just my knee jerking, (NO Feisty! Down girl), but I won't be happy cutting the elderly's cost of living to help pay for public employee unions' and Congress' cost of living increases.
Yeah Bob... you've got something jerking alright...trust me... it's not your knee! ;0)
Whew! 30 Minutes?
I was starting to worry about you, Feisty. I was afraid you choked on your popcorn when you say that one teed up (even despite the ineffectual insert/edit).
Glad you are OK.
Bob,,
Just dont mention Palin to her.. I mean. hey.
Feisty. Did i mention that Bristol is still on Dancing with the stars..
Isn't that special...
The boys have formed their very own Feisty Redhead Fan Club!
I'll leave it to the two of you to figure out who get's to be President... m'kay?
SWEET! ;0)
Uh-oh...
Time for President Obama to say something other than "...uh...".
This is his Commission.
Will he endorse their findings and recommendations?
Obama is on the clock.
What's it going to be, Mr. President?
I'll bet he punts.
Mixed,
With all of his promises, (health care, stimulus, etc.) Obama has been more of a Lucy so far and we have ended up on our backs like Charlie Brown.
Punt? He tried that with Afghanistan and he is about to get slammed to the turf with that one.
The most interesting / brief recommendation was tax reform. That surprised me. I was expecting taxes, VAT, etc., but reform, broaden the base and lower rates? It is what is really needed, but is this what Obama was wanting? Did he not stack the commission deck, or was Salazar not supposed to get the report first and change their findings?
Whatever comes out, Obama will do what he has done in the past, it will sound great, but there will be his agenda functions loaded into it that Republicans will object to. Then he'll blame the Republicans again. That's what he does best.
Get ready Charlie Brown......
He didn't really punt when he advocated for a stronger commission that could force Congress to vote. Now that it can only make recommendations, Obama has significantly less power to cut the deficit on his own.
Considering the back and forth on these boards about who is to blame for our current deficit and who was in power in our legislative and executive branches when deficits occured, you'd think we wouldn't be placing the burden for these changes squarely on the President's shoulders alone.
Wow.
A commission can force Congress to vote? Take away power from the president?
And I thought judges and czars were the only unelected officials that could make/interpret law.
The commission wouldn't have created law, it would have forced discussion on the issue. The original bill would have required congress to make an up or down vote on its recommendations. It failed, 53-46. 7 Republican co-sponsors of the bill decided to change their votes. The popular arguments against the bill were that it either took power from congress (nevermind that they seem incapable of cutting deficits in the first place) and fears on either side of tax increases or cuts to SSI/medicare. The commission was created via executive order, and as such, can only make recommendations. There is no guarantee of discussion in congress on any recommendations the commission may make.
I think the first thing they should cut is congressional paychecks and and bring them down to reality levels !! these people are getting rich on our tax dollars .
The DC pigs do a lot of blah blah blahing about being responsible spenders of the tax payer's dollars but they no better than to ask the over entitled citizens to part with anything. We'll see what happens when the details come out on the various plans. It's not going to be pretty though and I doubt anything will be done.
M.Fisher - I really hope you are wrong about getting something done. This is the "Change" Obama talked about, but probably not in the way he expected it to be. Change doesn't mean that everyone is happy with it. Everyone is going to have to give up something to support the Deficit Commission's plan. The country needs to take it's medicine to get the governments finances in order, and medicine seldom tastes good, it's not supposed to.
What it's going to take to get these Changes done is strong leadership headed more than likely by the President and by someone from the Republicans, more than likely Wisconsin's Paul Ryan, with the full support from Boehner. Not heeding the Commissions recommendations just means we'll have to address them later when they become even a bigger problem and are even less pleasant to deal with.
Like it or not, Willie Sutton was right about why he robbed banks: "That's where the money is."
SS and Medicare are where the money is in the federal budget and MUST be changed if there is ANY hope of ever reducing the deficit.
On an OT note: my local paper had a McClatchy Newspapers article today saying that the Barry Admin has decided to abandon its July 2011 Afghanistan troop reduction plan and will go public with it next week at a NATO conference. This one is really going to set off lefty liberal fireworks if it's true.
Stay tuned!!
Defense is also a bank, by that definition. The proposal included cuts to the pentagon, and it did include the "higher-payroll taxes for upper-income Americans" tax increase (I assume this means an increase in the ceiling of taxable SS wages, not an increase to the rate itself).
It seems like an acceptable starting point to bring Ds and Rs to the negotiating table.
Excellent report. Excellent work done by both Bowles and Simpson.
They've made a proposal that supports both a tax fairness for all Americans, and also addresses the costs of what no one wants to talk about: The entitlements.
Now lets see who is serious about putting the governments economic house in order. Any pol that claims this report is DOA should be voted out of office the next election they are in.
It's time the federal government took responsibility for it's failures.
Did Obama mention the wars in any of his campaign speeches the last few months? Don't recall any. Just a lot of rhetoric about a car in "D" or "R", and Republicans sitting in the back. Not much to go on at all.
Obama is going to have to spend a little time on explaining the goals of the conflict in Afghanistan to the American people. Are we in, are we out, and just what is the objective? And if you don't have an objective Obama, maybe lay the groundwork for one for when the next President comes into office in 2013. Wouldn't want him/her to inherit any of the problems Obama created.
If you are including Social Security under "entitlements", keep in mind that people are putting money into the system so they expect money out.
"Joe in Albany
Like it or not, Willie Sutton was right about why he robbed banks: "That's where the money is."
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Good point Joe, the money in this country is concentrated in the top 2% so it would seem logical to start extracting it from there to save the country, hell you never know the top 2% may like to do their Patriotic duty for a change of pace.
I hope they adopt this plan or at least something similar based on this plan. It is time for both parties to fish or cut bait on the deficit. It shouldn't come as a shock to anyone with basic math skills that to cut this deficit will involve both tax increases and painful spending cuts. Let's get 'er done!
Al in Visalia CA,
The main proposals in the report was to cut taxes and decrease spending.
Candice,
That's tax reform, not cuts. The removal of so many tax breaks would allow more revenue to be gained from lower rates, at least in theory. There was also a proposal for an increase in SS taxes for the wealthy. I think most of us are assuming this amounts to an increase in taxes.
As others have pointed out, the elimination of tax loopholes and deductions will serve to increase taxes. I don't think Bowles has drunk the supply siders Kool-aide that their idea of cutting taxes reduces deficits (an idea that has failed miserably for the past 30 years). Also there was a gas tax increase on the table (small yes but an increase).
Anon -- Actually, while the proposal cuts marginal tax rates (good idea) and eliminates PEP and AMT (excellent ideas), and increases exemptions (generously), it also eliminates or substantially reduces write offs, so in effect, taxes could come out higher for a lot of people. I guess someone would have to do the math.
Al in Visalia - Historically, though, tax cuts do raise revenues. Odd but true. Unfortunately, the more revenue the government gets its hands on, the more crazy spending occurs.
Candice - that decreases in tax rates occured near times of increased revenue to the government isn't proof of your point. Many tax cuts occured at the start of periods of prosperity. During these periods, more wealth was generated, increasing revenue to the government. Decreases in taxes do not directly account for the extra wealth generated during these periods either.
In regard to your first paragraph, yes, that's basically what I meant. Lowering rates but expanding the base will translate to a tax increase. How much, I can't say. I wouldn't expect it to be very large though.
Shouldn't Defense spending be cut more than social programs? After all, our 'policeman of the world' days have weakened us both fiscally and in terms of our security.
Too much spending on wars has resulted in us looking to cut Social Security--we've already dropped out of the competitive field of nations in terms of education.
And could we at least make sure every corporation pays their rightful share of taxes, and that this share come out of company dividends to stock holders?
I agree on defense, but I don't think that money has much to do with our nation's poor educational standing. Our allocation of education funds might be a problem though.
As for corporate taxes, I'd like to see a simplification of the tax code - lower rates and fewer breaks, something like this plan suggests for U.S. citizens.
Cut defense spending all you like...
But first, go back and look at footage of civilians fleeing bombs in Shanghai, Warsaw, Rotterdam, or London.
Or any other rain of destruction, anywhere, anytime.
You might even want to watch people fleeing the collapse of the World Trade Center towers not long ago at all.
Then...ask yourself what those poor souls thought was the primary responsibility of a government to its governed.
Lobbing for cuts to defense doesn't equate to an argument that we should be any less safe. As with most government programs, there are cuts to be made.
Does it bother anyone else that the first things that are always on the chopping block are defense, SSI, Medicare, Education, and Public Safety? Are there really no other programs we can cut?
What about military funding to countries like Pakistan and Israel?
What about subsidizing certain industries?
What about cutting financial aid to any foreign country for any reason unti lwe have balanced our budget at home? Do we really need to be worrying about other countries when we are considering cutting the fixed incomes of our own citizens?
Why does it always come to this first? I'm not saying that Defense or any other one of those areas can't be cut, but why them first?
Defense, SSI and medicare account for extremely large chunks of federal spending, and education/public safety account for even larger chunks of state and local budgets, respectively. It's natural for realistic budget cutting measures to look at these programs first.
Brutus CA -
One of the recommendations within the proposal is to cut back on foreign aid.
And to cut subsidies.
You know, spouting off on a report not actually read is what gets the country all riled up. Come on folks, it's only 50 half pages long and an easy read!
Yeah, I was more commenting on other comments on this board going back and forth about defense vs SSI.....
I understand, Brutus, and agree.
Why are they not looking at some of the simpler solutions to the Social Security problem! We currently cap SS deductions at $106,000 of income. If we were to remove that cap and make the wealthy pay on 100% of their salaried income, like the other 95% of the people have to, the SS problem would be solved. Not only would it be solved, we could reduce from 6.5% down to 3-4% the amount deducted from each paycheck for Social Security!
Diane - I agree with you 100%. Also let's get one thing straight for all of you who think SS is an entitlement program. It is an insurance program into which people pay a premium for a defined period of time at the end of the defined contribution period a defined benefit is paid. It's a classic insurance plan. So all you conservative ideologues....stop calling SS an entitlement program because you're misleading and wrong.
You are right. If you recall, that's what presidential candidate Obama said during the 2008 campaign. This needs to be done now while we still have more workers than retirees.
The problem is that goverment took the money and spent the reserves. So the money is not there. It will require higher taxes to repay the social security trust fund and not just higher social security taxes. Socail Security is in trouble, because the Federal goverment can not repay the trust fund without raising income taxes and it is very unlikely that anybody in the Federal goverment has the ability or desire to change. As long as social security is running surpluses, then it works.
Diane, if they uncapped Social Security, I would favor a rollback of the retirement age to 65 if the funding was there to support it.
Al, I agreed and I add that Senator Bernie Saunders (I-VT) is responding the same way;
"The Simpson-Bowles deficit reduction plan is extremely disappointing and something that should be vigorously opposed by the American people. The huge increase in the national debt in recent years was caused by two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout. Unlike Social Security, none of these proposals were paid for. Not only has Social Security not contributed a dime to the deficit, it has a $2.6 trillion surplus.
It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age. It also is totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers.
Despite all of the right-wing rhetoric, Social Security is not going bankrupt. According to the Congressional Budget Office, Social Security can pay every nickel owed to every eligible American for the next 29 years and after that about 80 percent of benefits.
If we are serious about making Social Security strong and solvent for the next 75 years, President Obama has the right solution. On October 14, 2010, he restated a long-held position that the cap on income subject to Social Security payroll taxes, now at $106,800, should be raised. As the president has long stated, it is absurd that billionaires pay the same amount into the system as someone who earns $106,800.
With the richest people in this country getting richer and the middle class in decline, it is absurd that billionaires pay the same amount into the Social Security system as someone who earns $106,800."
They've looked at raising the cap on Social Security deductions before. Since Social Security is an insurance/forced savings plan, the more a person puts in -- the more they would be entitled to receive at retirement. To contribute more but be entitled to less is a redistribution of wealth.
As CaliforniaGirl said above, keep in mind that people are putting money into the system so they expect money out.
Diane from California,
Senator Saunders obviously did not actually read the proposal. There’s a provision for labor intensive workers that exempts them from the increase in retirement age.
Let's not cut the bloated defense budget or consider cutting a few loopholes out of the wealthiest tax code, maybe quit being the Worlds police force for free, hell maybe even require Corporations to actually pay some of that outrageously high tax they never do, sorry I know that would be ridiculous. Instead lets balance the budget on the backs of the poor and the middle class, after all that is what America is all about, why inconvenience the filthy rich when you can take a dignified retirement away from the masses, do away with medicare altogether then more will die before they can use up any social security monies that they have paid in all their lives, your killing two birds with one stone there all you good wealthy Republicans surely would buy into such a just and fair for all idea, maybe tax the working class at 40% of their income and let people making over $500,000 pay about 12% of theirs, oh wait a minute scratch that one, that's how our current loophole infested tax code works right now so leave that be. This country has became an utter disgrace where the masses do without so a few can have it all, historically speaking how does this story allways end?
Sad but true, WBush.
It ends with let them eat cake.
It would be wise for both parties to neither reject or accept these recommendations without careful review and consideration. If citizens are serious about reducing the debt, citizens actually be willing to accept some of these recommendations otherwise, stop whining about the debt.
Finally, someone willing to say out loud that in order to reduce the debt, there must be increased taxes paid. For 30 years, voters have been sold the idea that taxes are evil yet we expect the same services that we always had. We want national security, a strong military, fire, police, good roads, good schools--republican legislators since Reagan behaved as if money grew on trees. Now, we must all pay the price for their tax cuts and increased, unfunded spending--yes, people, it was the republicans who created the lions share of the debt despite all their finger-pointing at Pres Obama and democrats. It was republicans who dug the hole too deep thereby making economic recovery even more difficult. Republicans call democrats the tax and spend party, well, I prefer legislators who pay for what they spend instead of charging it.
I'm still waiting for the GOP/TP to explain what benefits Americans received for their doubling of the national debt from 2001-2008. Where did all the money go during the Bush years? 50% of the Bush tax cuts went to 2% of the population who mostly put it in the bank. Afghanistan, Iraq, defense and not much else. Think of the good that money could have done if spent on infrastructure, a new energy grid, aid to the true small business to encourage entreprenaurial spirit, investing in clean energy programs, space technology, science research and development--all here in the USA.
My view on social security is raise the amount of income on which it is paid. I do not think raising the age beyond what it already has been raised for full retirement is the answer. That might be fine if every worker sat at a desk but for those whose jobs involve heavy lifting and other highly physical activities, I've seen older workers struggle in those jobs and not because they aren't trying. I don't think reducing the cost of living increases makes any sense--some retirees barely get by as it is; the cost of living is what it is and punishing seniors with less as it increases seems wrong. I would add one to the commission's report shown here--modify the rule that allows retirees who continue to work full time and at age 70 draw their full social security benefits as well. I'm not saying they should be forced to retire but if they're earning a good salary, their benefits should be reduced accordingly just as they are for people under age 70 who must be careful not to work more than a certain number of hours or lose their benefits. If they want to gradually raise the retirement age, then they must address the fact that many high wage earners work drawing a full salary and full social security benefits. We are entitled to our social security benefits but they are intended for retirement.
That's right cuts to Social Security for the Seniors. I don't think so.
The newly elected tea baggers are already showing... its all talk and nothing more...caving verbally all all they were going to change ....Most of then will be voted out next election ...
This is by far one of the most level-headed debates I have ever seen on First Read. If I didn't know any of your political affiliations from reading your previous posts, I would have had a hard time picking who was for which party. It seems we all (sorta) agree on things that need to be done. It will take some belt tightening from everyone to help us get out of this financial mess that we are in.
While I don't subscribe completely to the Keynsian or Chartalist economic theories whole heartedly they do have some merit. Deficit spending and government expansion have historically helped to right the economy in times of recession. But we do have to repay that borrowed money that we spent. Money can be created by deficit spending, but it can also be created by keeping it in the hands of consumers.
I may lose my Republican Lifetime Membership and decoder ring for this but I would support a modest tax increase accross the board. This would have to be coupled with true spending cuts (SS, defense, mail, etc). These bureaucracies are so full of waste, fraud, and redundancy. If they were run more like a business, we could decrease funding to them and never see a loss of services.
Regarding Social Security, how about allowing younger workers the option of "opting out"? If you "opt out" then 6.2% of your 12.4% going to pay for today's Social Security recipients can be directed to a fund that you control directly. Like a 401k. This will allow workers to receive a higher gain than they would normally have received if they stayed in Social Security their entire working life. If you like the current system, you can stay in it.
I absolutely agree about offering the ability for younger people to opt out of social security - even partially as you suggest. Personal accounts, though, must have flexibility in investment choices that a person can control, but there has to be some sort of annuity/insurance type guarantee. Otherwise, we may wind up having to take care of those who make poor investment decisions in the end anyway, wouldn't we?
I especially like the idea of the ability to pass on a privatized account to your heirs --- rather than have it go back to the government coffers. I know people who happily retired, collected one social security check and died. Their families could have used the balance of their payments instead of forfeiting a lifetime of income back to the government.
I am not sure where this takes us, but we have to look at these budget proposals, presently and for the next year or so, through the prism of job creation.
I am convinced that extending the tax cuts for the top brackets will not result in any significant creation of new jobs, and in the long run will dampen it; however, I would look at the proposal to exempt from increase that portion of Sub-S earnings above $250,000 that is retained and dedicated to new hiring. The revenue side of the equation is every bit as important as the spending side.
I would also be very interested in learing the approach that was taken by this commission - their methodology, and the criteria they used to assess government programs for both effectiveness (if that was an issue) and efficiency.
It all sounds good except for raising the SS retirement age. It is already 67 for me, why should it ever get any higher? If you want to ensure that many people can never retire, raise it to 70 or 72. But in this day and age, shouldn't everybody get a little gravy after forty to forty-five years of work? Global competition has given us cheap electronics, but it has ruined everything else. Why don't the workers here start contacting their fellow workers abroad to strike for international standards for vacation, retirement, etc. An international strike might scare the hell out of the financiers who are making hundreds of million of dollars just importing, exporting, and marketing. And yes, take the cap off of the SS tax and you could lower the rate for ordinary citizens and let people retire at 67.
Sounds like you are reading from Andy Stern's playbook. First one world labor union , then one world government. Thanks, but no thanks.
I find it difficult to believe that Congress would agree to remove all income tax deductions. Many Americans think this is a great idea. The problem is that Congress would never yield their number one tool for social engineering: the tax code.
These two Co-Chairs have not respected the President's Executive Order which clearly delineated their responsibilities (which did not include releasing a draft of THEIR proposals to the public before getting the requisite bi-partisan approval of 14 Commission members & first presenting recommendations to Congress)and it looks like these old guys' egos were desperate for publicity.
1) To reach bi-partisan consensus
2) Commission Chairs must gain 14 of 18 Commission member votes on recommendations before reporting any such recommendations to Congress
3) Bi-partisan recommendations, having gained 14 votes, are to be first presented to Congress on December 1st, 2010
The Executive Order, link below, does not ask for input on Social Security, but apparently Senator Alan Simpson has allowed his lifelong obsession (and Rep Paul Ryan's Roadmap for America) with Social Security to overstep the boundaries laid out by President Obama. His recommendations are unlikely to get bi-partisan consensus and are, therefore, a waste of media and the public's time.
The report as a whole is lopsided and favors business/special interests & wealthier Americans, and does not merit comment at this point since it does not represent the work of the 18-person Commission, only a small group with an agenda who chose to release the unapproved Draft.
http://www.whitehouse.gov/the-press-office/executive-order-national-commission-fiscal-responsibility-and-reform http://www.tnr.com/article/politics/79093/deep-six-the-deficit-commission-report?utm_source= ESP+Integrated+List&utm_campaign=2ea6044c9f-T