Debt Commission Chairs Release Draft Plan

[Ellen Z]

The co-chairs of the Debt Commission just released the current version of their report (not yet approved by the full commission.) The plan would reduce the deficit by nearly $4 trillion over the next decade:

raises social security retirement age
deletes tax break for mortgage interest
eliminates special tax rate for capital gains
simplifies and lowers income tax rates

According to co-chair　Erskine Bowles, about 75 percent of the proposed deficit reduction comes from spending cuts, and 25 percent from "the revenue side."

http://thehill.com/blogs/on-the-mone...ssion-chairmen

http://thehill.com/blogs/blog-briefi...ocial-security

[Penguin]

Re: Debt Commission Chairs Release Draft Plan

Read an article on this today. Although there are parts of it I would quibble about, taken in sum it seems to me a good start. Knowing how things I am in favor of fare in congress this means a swift merciless death at the hands of our good lads and lasses in DC.

Will

[Scot]

Re: Debt Commission Chairs Release Draft Plan

The co-chairs of the Debt Commission just released the current version of their report (not yet approved by the full commission.) The plan would reduce the deficit by nearly $4 trillion over the next decade:

raises social security retirement age
deletes tax break for mortgage interest
eliminates special tax rate for capital gains
simplifies and lowers income tax rates

According to co-chair　Erskine Bowles, about 75 percent of the proposed deficit reduction comes from spending cuts, and 25 percent from "the revenue side."

http://thehill.com/blogs/on-the-mone...ssion-chairmen

http://thehill.com/blogs/blog-briefi...ocial-security

Why not eliminate the deduction for state and local taxes, too? Seems to me the federal government shouldn't be subsidizing bloated state and local government budgets.

[flintlock]

Re: Debt Commission Chairs Release Draft Plan

I liked it as a start also. Most will never happen though. Too many sacred cows.

[tsetsefly]

Re: Debt Commission Chairs Release Draft Plan

not a bad star, I would like to see corporate tax brought down as well.

There is no chance that 90% of these actually get passed through congress... Too many interest. ONe that should be a no brainer is simplifying the tax code, but the accounting and lawyer lobbyist will fight too hard to make it impossible to pass...

[flintlock]

Re: Debt Commission Chairs Release Draft Plan

I thought I heard somewhere that lower corporate taxes were on the table. I think most people do not understand the importance of this. If US companies cannot attract and keep businesses, all the cuts in the world won't help.

[shiny!]

Re: Debt Commission Chairs Release Draft Plan

ONe that should be a no brainer is simplifying the tax code, but the accounting and lawyer lobbyist will fight too hard to make it impossible to pass...

The "Republican Revolution" in 1994 promised a simplified income tax that could be completed on a postcard. We can see how well that turned out.

[oddlots]

Re: Debt Commission Chairs Release Draft Plan

Nice snark care of Naked Capitalism:

First posted by Steve at The Daily Bail
Dear Esteemed Chairmen:
No huge surprise here. What’s unfortunate for you is that for years, even decades – going back to Ross Perot – the American people have been prepared for and willing to accept changes (cuts) to Social Security. You, the politicians never gained the courage to ask, but I think for the most part the general public has been ready. And since I’ve been screaming about these issues my entire adult life, and have always pushed the concept of shared sacrifice as a means to budget sanity and limited government, I’m not comfortable with what I’m about to write, but it’s inescapable after watching and recording a 32-month orgy of fiscal mayhem dominated by trillion-dollar bailouts, trillions in wasted stimulus, and trillions gifted to the military-industrial killing machine.
Fast forward from the Perot deficit awakening 20 years ago, and finally, you, the generationally-irresponsible political class seem to be facing up to the unfunded entitlement budget nightmare of your own creation – or at least you’re in the discussion phase of ‘facing it’ – and what is the societal backdrop? Seething anger over the recession, the wars, multiple failed stimulus, dollar destruction, QE, and the government bailouts of favored industries.
So against this backdrop, your Commission now recommends cuts to Social Security and a hike in the retirement age to help us on our merry way to a fiscally sane future.
Here’s my recommendation for you.
The American people are willing to sacrifice as part of a shared effort at righting our budgetary path, but they are not prepared to be sacrificial lambs led to the ‘benefits and promises slaughterhouse’ while the Wall Street Banker Pigs gorge on trillions in stealth FED and FDIC bailouts, ZIRP giveaways and a record $144 billion in bonuses – an amount equivalent to the 49th largest GDP in the world – $144 billion in bonuses being paid by criminally insolvent banks that are only still operating due to a Wall Street financed K-Street lobbying tsunami that forced FASB to change the accounting rules that now allow these same insolvent institutions of usury and arrogance to apply Faustian valuations to complete shit assets all over their lying, godforsaken, Enron resembling, off-balanced, imbalanced, bs-balanced, sheets.
Banks exist in the lala land of leveraged deferred tax assets representing most of tier-1 capital at Citigroup, of hundreds of billions of helocs at Wells Fargo worth pennies, but marked at dollars, of hundreds of billions of fraudulent MBS pumped out by Countrywide, whose liability now sits with Bank of America. This is a mere glimpse of the great banking lie that provides cover for the $144 billion insolvent bonus river that bathes the Street, all supported and paid for by taxpayers, Treasury and the Federal Reserve. Therefore, ultimately, taxpayers.
In this environment, selling ‘cuts to social security’ is not going to work, and considering the role you both played in creating the irresponsible federal spending machine that now controls Washington and has bankrupted future unborn generations, fuck you for even bringing it up.

[Munger]

Re: Debt Commission Chairs Release Draft Plan

Nice snark care of Naked Capitalism:

First posted by Steve at The Daily Bail
Dear Esteemed Chairmen:
No huge surprise here. What’s unfortunate for you is that for years, even decades – going back to Ross Perot – the American people have been prepared for and willing to accept changes (cuts) to Social Security. You, the politicians never gained the courage to ask, but I think for the most part the general public has been ready. And since I’ve been screaming about these issues my entire adult life, and have always pushed the concept of shared sacrifice as a means to budget sanity and limited government, I’m not comfortable with what I’m about to write, but it’s inescapable after watching and recording a 32-month orgy of fiscal mayhem dominated by trillion-dollar bailouts, trillions in wasted stimulus, and trillions gifted to the military-industrial killing machine.
Fast forward from the Perot deficit awakening 20 years ago, and finally, you, the generationally-irresponsible political class seem to be facing up to the unfunded entitlement budget nightmare of your own creation – or at least you’re in the discussion phase of ‘facing it’ – and what is the societal backdrop? Seething anger over the recession, the wars, multiple failed stimulus, dollar destruction, QE, and the government bailouts of favored industries.
So against this backdrop, your Commission now recommends cuts to Social Security and a hike in the retirement age to help us on our merry way to a fiscally sane future.
Here’s my recommendation for you.
The American people are willing to sacrifice as part of a shared effort at righting our budgetary path, but they are not prepared to be sacrificial lambs led to the ‘benefits and promises slaughterhouse’ while the Wall Street Banker Pigs gorge on trillions in stealth FED and FDIC bailouts, ZIRP giveaways and a record $144 billion in bonuses – an amount equivalent to the 49th largest GDP in the world – $144 billion in bonuses being paid by criminally insolvent banks that are only still operating due to a Wall Street financed K-Street lobbying tsunami that forced FASB to change the accounting rules that now allow these same insolvent institutions of usury and arrogance to apply Faustian valuations to complete shit assets all over their lying, godforsaken, Enron resembling, off-balanced, imbalanced, bs-balanced, sheets.
Banks exist in the lala land of leveraged deferred tax assets representing most of tier-1 capital at Citigroup, of hundreds of billions of helocs at Wells Fargo worth pennies, but marked at dollars, of hundreds of billions of fraudulent MBS pumped out by Countrywide, whose liability now sits with Bank of America. This is a mere glimpse of the great banking lie that provides cover for the $144 billion insolvent bonus river that bathes the Street, all supported and paid for by taxpayers, Treasury and the Federal Reserve. Therefore, ultimately, taxpayers.
In this environment, selling ‘cuts to social security’ is not going to work, and considering the role you both played in creating the irresponsible federal spending machine that now controls Washington and has bankrupted future unborn generations, fuck you for even bringing it up.

What is up with everyone vilifying Social Security recently when the 20,000 lbs elephant in the room is Medicare? Sure, Social Security has a few long-run problems (which are not actually that difficult to deal with), but its problems are absolutely dwarfed by those of Medicare. I mean, its laughable. Particularly Medicare Part D, which Bush II jammed through a Republican congress.

[oddlots]

Re: Debt Commission Chairs Release Draft Plan

+ 1 (but I thought the last two paragraphs were worthy of consideration. If this guy, coming from a fiscally conservative position, can see the scam for what it is then I'm encouraged.)

Ultimately I think the cause is accurately outlined by Hudson. For example, here:

"What is remarkably left out of account is that today’s financial crisis centered on public debts is largely a fiscal crisis. It is caused by replacing progressive taxation with regressive taxes, and above all by untaxing finance and real estate. Take the case of California, where tears are being shed over the dismantling of the once elite University of California system. Since American independence, education has been financed by the property tax. But Proposition 13 has “freed” property from taxation – so that its rental value can be borrowed against and turned into interest payments to banks.[3] California’s real estate costs are just as high with its property taxes frozen, but the rising rental value of land has been paid to the banks – forcing the state to slash its fiscal budget or else raise taxes on labor and consumers.


[ ]


Throughout the world, scaling back the 20th century’s legacy of progressive taxation and untaxing real estate and finance has led to a public debt crisis. Property income hitherto paid to governments is now paid to the banks. And although Wall Street has extracted $13 trillion in bailouts just since October 2008, the thought of raising taxes on wealth to pay just $1 trillion over an entire decade for Social Security or health insurance is deemed a crisis that would lead Wall Street to shut down the economy. It is telling governments to shift to a regressive tax system to make up the fiscal shortfall by raising taxes on labor and cutting back public spending on the economy at large. This is what is plunging economies from California to Greece and the Baltics into fiscal and financial crisis. Wall Street’s solution – to balance the budget by cutting back the government’s social contract and deregulating finance all the more – will shrink the economy and make the budget deficits even more severe.


Financial speculators no doubt will clean up on the turmoil."


http://michael-hudson.com/2010/02/wa...-for-the-kill/


For those for whom Hudson seems too lefty, please explain to me why the FIRE economy analysis is flawed. At base it provides a model where extractive finance industries shrinks the economy progressively, choking off demand by reducing disposable income after high taxation and interest payments have been deducted to the benefit of finance. This model seems a remarkably accurate description of our quandry.

[we_are_toast]

Re: Debt Commission Chairs Release Draft Plan

What is up with everyone vilifying Social Security recently when the 20,000 lbs elephant in the room is Medicare? Sure, Social Security has a few long-run problems (which are not actually that difficult to deal with), but its problems are absolutely dwarfed by those of Medicare. I mean, its laughable. Particularly Medicare Part D, which Bush II jammed through a Republican congress.

Yep, it's not a serious plan to cut the deficit, it's a serious plan to cut government.

Is the Deficit Commission Serious?
— By Kevin Drum| Wed Nov. 10, 2010 8:46 PM PST
I've been trying to figure out whether I have anything to say about the "chairman's mark" of the deficit commission report that was released today. In a sense, I don't. This is not a piece of legislation, after all. Or a proposed piece of legislation. Or even a report from the deficit commission itself. It's just a draft presentation put together by two guys. Do you know how many deficit reduction proposals are out there that have the backing of two guys? Thousands. Another one just doesn't matter.

But the iron law of the news business is that if people are talking about it, then it matters. So this report matters, even though it's really nothing more than the opinion of Alan Simpson and Erskine Bowles. So here's what I think of it, all contained in one handy chart from the Congressional Budget Office:



Here's what the chart means:

Discretionary spending (the light blue bottom chunk) isn't a long-term deficit problem. It takes up about 10% of GDP forever. What's more, pretending that it can be capped is just game playing: anything one Congress can do, another can undo. So if you want to recommend a few discretionary cuts, that's fine. Beyond that, though, the discretionary budget should be left to Congress since it can be cut or expanded easily via the ordinary political process. That's why it's called "discretionary."
Social Security (the dark blue middle chunk) isn't a long-term deficit problem. It goes up very slightly between now and 2030 and then flattens out forever. If Republicans were willing to get serious and knock off their puerile anti-tax jihad, it could be fixed easily with a combination of tiny tax increases and tiny benefit cuts phased in over 20 years that the public would barely notice. It deserves about a week of deliberation.
Medicare, and healthcare in general, is a huge problem. It is, in fact, our only real long-term spending problem.
To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn't maintain approximately that ratio shouldn't be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That's not serious.

There are other reasons the Simpson-Bowles plan isn't serious. Capping revenue at 21% of GDP, for example. The plain fact is that over the next few decades Social Security will need a little more money and healthcare will need a lot more. That will be true even if we implement the greatest healthcare cost containment plan in the world. Pretending that we can nonetheless cap revenues at 2000 levels isn't serious.

And their tax proposal? As part of a deficit reduction plan they want to cut taxes on the rich and make the federal tax system more regressive? That's not serious either.

Bottom line: this document isn't really aimed at deficit reduction. It's aimed at keeping government small. There's nothing wrong with that if you're a conservative think tank and that's what you're dedicated to selling. But it should be called by its right name. This document is a paean to cutting the federal government, not cutting the federal deficit.

[Chomsky]

Re: Debt Commission Chairs Release Draft Plan

Yep, it's not a serious plan to cut the deficit, it's a serious plan to cut government.

The chart reproduced from that Mother Jones piece (no attribution to it in your post; here's the link: http://motherjones.com/kevin-drum/20...ission-serious), is from 2008, before tax receipts collapsed due to the recession. Here's the chart:



Here's the report itself:

http://www.cbo.gov/ftpdocs/93xx/doc9..._Testimony.pdf

I'd imagine that the chart would look a LOT different with the collapse in tax revenue of the past two years marked in.

[ThePythonicCow]

Re: Debt Commission Chairs Release Draft Plan

What is up with everyone vilifying Social Security recently when the 20,000 lbs elephant in the room is Medicare?

Is this just the federal version of what we often see locally -- when a local government wants to beat the drums for more money, the first thing it does it cut one of the most visible and cost efficient services it can find, like park maintenance or cops on the beat or firehouses or library hours. They they go crying to the public "woe unto me, look at how poor I am!"

[Serge_Tomiko]

Re: Debt Commission Chairs Release Draft Plan

What is up with everyone vilifying Social Security recently when the 20,000 lbs elephant in the room is Medicare? Sure, Social Security has a few long-run problems (which are not actually that difficult to deal with), but its problems are absolutely dwarfed by those of Medicare. I mean, its laughable. Particularly Medicare Part D, which Bush II jammed through a Republican congress.

Because no one is going to care about stealing the money of old white people. They're all racists anyway, and deserve it.

Medicare on the other hand is the means by which free healthcare will soon be given to the masses of fertile voters.

[oddlots]

Re: Debt Commission Chairs Release Draft Plan

They're all racists anyway, and deserve it.

You're the only true life racist I've encountered for quite a while Serge.

Don't smear my parents please.

BTW you might want to check out this discussion of race from a science perspective:

http://www.radiolab.org/2008/dec/15/

Paleo-conservative doesn't do you justice.

Stay thirsty my friend.