Deficit Commission report to be released

[Balta1701]

The debacle which is the "Obama bi-partisan deficit commission" is about to return the beginning part of its report on how to balance the budget. Although it also sounds like the commission will not be able to officially endorse its own plan, here's some of the things that it has proposed.

A draft proposal to be released Wednesday by the chairmen of President Obama’s bipartisan commission on reducing the federal debt calls for deep cuts in domestic and military spending starting in 2012, and an overhaul of the tax code to raise revenue. Those changes and others would erase nearly $4 trillion from projected deficits through 2020, the proposal says.

 

The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.

 

But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books.

 

The proposed simplification of the tax code would repeal or modify a number of popular tax breaks — including the deductibility of mortgage interest payments — so that income tax rates could be reduced across the board. Under the plan, individual income tax rates would decline to as low as 8 percent on the lowest income bracket (now 10 percent) and to 23 percent on the highest bracket (now 35 percent). The corporate tax rate, now 35 percent, would also be reduced, to as low as 26 percent.

 

Even after reducing the rates, the overhaul of the tax code would still yield additional revenue to reduce annual deficits — a projected $80 billion in 2015.

 

But how low the rates are set would depend on how many tax breaks are reduced or eliminated. Some of them, including the mortgage interest deduction and the exemption from taxes for employees’ health benefits, are political sacred cows.

[BigSqwert]

Looking forward to hear their recommendations on defense spending.

[Balta1701]

Looking forward to hear their recommendations on defense spending.

Here's a (Slowly loading) link to the full report. There's about $100 billion in annual defense cuts.

Apply overhead savings Secretary Gates has promised to deficit reduction

 

Freeze federal salaries, bonuses and compensation at the DOD for 3 years

 

Freeze noncombat military pay at 2011 levels for 3 years

 

Double Secretary Gates's cuts to defense contracting

 

Reduce procurement by 15%

 

Reduce overseas bases by 1/3

 

Modernize tricare, defense health

 

Replace military personnel performing commercial activities with Civilians

 

Reduce spending on R & D, Test & Evaluation by 10%

 

Reduce Spending on base support

 

Consolidate the DOD's Retail activities

 

Integrate children of military personnel into local schools

 

If you're smart, you'll notice the silliness here. The 2nd largest line item is reducing procurement by 15%. Of course...that is easy to say...when you don't have to actually say WHICH THINGS YOU'RE GOING TO CUT!

[NorthSideSox72]

Here's a (Slowly loading) link to the full report. There's about $100 billion in annual defense cuts.

 

 

If you're smart, you'll notice the silliness here. The 2nd largest line item is reducing procurement by 15%. Of course...that is easy to say...when you don't have to actually say WHICH THINGS YOU'RE GOING TO CUT!

its step one. Let's not go all medieval on this thing before it gets off the ground.

 

[Balta1701]

its step one. Let's not go all medieval on this thing before it gets off the ground.

Do you genuinely think that a plan calling for the elimination of the mortgage interest tax deduction and of the tax deduction for health care costs is anything other than political suicide for anyone who votes for it?

[Y2HH]

Do you genuinely think that a plan calling for the elimination of the mortgage interest tax deduction and of the tax deduction for health care costs is anything other than political suicide for anyone who votes for it?

 

It will never happen anyway.

 

The last thing the housing market can sustain right now is the elimination of mortgage interest tax.

 

And the last thing opponents of the Health Care legislation need right now is a removal of that tax deduction. It'll turn a lot more people against this new reform even if it's unrelated changes of law.

Edited November 10, 2010 by Y2HH

[NorthSideSox72]

Do you genuinely think that a plan calling for the elimination of the mortgage interest tax deduction and of the tax deduction for health care costs is anything other than political suicide for anyone who votes for it?

Not if it means all income taxes are lowered.

 

In any case, again, this is a proposal, for discussion. And if you look more closely at what is going on here, you will see what they are actually trying to do.

 

[Balta1701]

Not if it means all income taxes are lowered.

 

In any case, again, this is a proposal, for discussion. And if you look more closely at what is going on here, you will see what they are actually trying to do.

Actually, what they're trying to do is apply political pressure to the other commissioners to vote for something close to their plan. They weren't required to release a public report yet, they're putting this out and having press events to try to gin up political support for their plan amongst the other commissioners.

[NorthSideSox72]

Actually, what they're trying to do is apply political pressure to the other commissioners to vote for something close to their plan. They weren't required to release a public report yet, they're putting this out and having press events to try to gin up political support for their plan amongst the other commissioners.

Sort of. There are two more important political undercurrents here.

 

[Balta1701]

Sort of. There are two more important political undercurrents here.

Which are?

[NorthSideSox72]

Which are?

For one thing ObamaCo is tired of the GOP controlling the narrative on deficit and debt issues.

 

For another thing, after all the bluster during the elections of cutting spending, his administration wants to call them to the table. You want to cut spending? OK, here's what's involved. And then they show that to the public. See how that works?

 

[Balta1701]

For one thing ObamaCo is tired of the GOP controlling the narrative on deficit and debt issues.

 

For another thing, after all the bluster during the elections of cutting spending, his administration wants to call them to the table. You want to cut spending? OK, here's what's involved. And then they show that to the public. See how that works?

I get the latter part...but the way to get the narrative on the deficit back is not to offer up your support for substantial Social Security cuts (which the deficit co-chairs willingly say has zero to do with the remainder of their deficit proposals, they just don't like OASDI)

[NorthSideSox72]

I get the latter part...but the way to get the narrative on the deficit back is not to offer up your support for substantial Social Security cuts (which the deficit co-chairs willingly say has zero to do with the remainder of their deficit proposals, they just don't like OASDI)

That's a bluff, they aren't actually offering that up at all. GOP says no, Dems can say "fine, see how hard this is?" GOP says yes, Dems say great, you go ahead and run with that, and see what happens.

 

[Balta1701]

That's a bluff, they aren't actually offering that up at all. GOP says no, Dems can say "fine, see how hard this is?" GOP says yes, Dems say great, you go ahead and run with that, and see what happens.

That gambit only works if you legitimately believe anyone actually cares about the deficit as anything other than a political cudgel.

 

Based on the number of people who complain about the deficit on 1 hand and endorse extensions of Bush's tax cuts on the other, or the number of people who say openly that cutting taxes doesn't increase the deficit and then still go on to win elections, I don't think it works that way in real politics.

[Balta1701]

I didn't catch this initially, but it's one of their health care cost control options.

Add a robust public option and/or all-payer system in the exchange

[mr_genius]

From what I've read and heard (which is fairly incomplete) about the commission report, I support the measures.

[NorthSideSox72]

That gambit only works if you legitimately believe anyone actually cares about the deficit as anything other than a political cudgel.

 

Based on the number of people who complain about the deficit on 1 hand and endorse extensions of Bush's tax cuts on the other, or the number of people who say openly that cutting taxes doesn't increase the deficit and then still go on to win elections, I don't think it works that way in real politics.

No, the gambit works well specifically because it doesn't matter if anyone (or any majority) really cares about it. It works in the administration's favor either way.

 

[Balta1701]

No, the gambit works well specifically because it doesn't matter if anyone (or any majority) really cares about it. It works in the administration's favor either way.

The Foxnews.com banner yesterday read "Obama Debt Panel Eyes Cutting Social Security, Home Deduction."

[NorthSideSox72]

The Foxnews.com banner yesterday read "Obama Debt Panel Eyes Cutting Social Security, Home Deduction."

Of course it did. Are you surprised?

 

[EvilMonkey]

The Foxnews.com banner yesterday read "Obama Debt Panel Eyes Cutting Social Security, Home Deduction."

Well, it did, didn't it?

[caulfield12]

There's no way a billionaire should be paying the same in SS deductions as someone at $106,500. That's insane.

 

They're proposing getting rid of the deductions for mortgages and health insurance (I think) but it feels to me like the majority of burden is still on the middle class. Of course, the rich will seize on this indexing/means testing as a way to make it about populism, "stealing" or redistributing from the upper class and give to the poor...but we won't even have much of a middle class left in 10-20 years the way things are going right now.

 

Let's face it, SS is funded for 20-30 years and there's currently a $2.5 trillion surplus in that area...if they wouldn't keep borrowing from it.

 

So basically, we're all being told we'll have to work until we're 69 or take reduced benefits because 1) Bush's tax cuts that weren't offset by any spending decreases or cost controls, 2) the unfunded Medicare prescription plan that was written by the pharmaceutical industry AND 3) two wars that are making us less safe and costing thousands of lives...we pull back our troops from AFGH, that's $300,000,000 right there.

 

But you know they'll seize on this silly earmarks issue, when the GOP to this day won't give them up. I don't think DeMint will get 24 votes to move it forward on the agenda.

 

 

[NorthSideSox72]

Fixing SSI to be solvent forever is really friggin easy. Just remove the stupid, regressive cap on income for taxation. Its one of two tax increases at the federal level I am actually OK with.

 

[Cknolls]

There's no way a billionaire should be paying the same in SS deductions as someone at $106,500. That's insane.

 

They're proposing getting rid of the deductions for mortgages and health insurance (I think) but it feels to me like the majority of burden is still on the middle class. Of course, the rich will seize on this indexing/means testing as a way to make it about populism, "stealing" or redistributing from the upper class and give to the poor...but we won't even have much of a middle class left in 10-20 years the way things are going right now.

 

Let's face it, SS is funded for 20-30 years and there's currently a $2.5 trillion surplus in that area...if they wouldn't keep borrowing from it.

 

So basically, we're all being told we'll have to work until we're 69 or take reduced benefits because 1) Bush's tax cuts that weren't offset by any spending decreases or cost controls, 2) the unfunded Medicare prescription plan that was written by the pharmaceutical industry AND 3) two wars that are making us less safe and costing thousands of lives...we pull back our troops from AFGH, that's $300,000,000 right there.

 

But you know they'll seize on this silly earmarks issue, when the GOP to this day won't give them up. I don't think DeMint will get 24 votes to move it forward on the agenda.

 

 

See that everyone. GW's fault. Not the baby boomers soon to retire and the lack of workers to fill their place. GW. LMFAO!

[caulfield12]

See that everyone. GW's fault. Not the baby boomers soon to retire and the lack of workers to fill their place. GW. LMFAO!

 

So the Baby Boomers aging over the last 30 years is the cause of the deficit?

 

Sure.

 

This is from the Heritage Foundation

•President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion. (probably because he had to rescue the carmakers, AIG, half the banks, Fannie Mae, Freddie Mac, etc.)

 

•President Bush began a string of expensive finan­cial bailouts. President Obama is accelerating that course. (wow, and all those bankers are so thankful)

•President Bush created a Medicare drug entitle­ment that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new govern­ment health care fund. (the CBO says the new health care plan will SAVE $700 million, guess they forgot that part)

•President Bush increased federal education spending 58 percent faster than inflation. Presi­dent Obama would double it. (Obama's school reforms are more Republican than Democrat)

•President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already in­creased this spending by 20 percent. (shame that we are trying to help the middle class that Reagan, Bush and Bush Jr. tried to destroy)

•President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend. (WHAT???????)

[Balta1701]

So the Baby Boomers aging over the last 30 years is the cause of the deficit?

More specifically, baby boomers aging and retiring over the next 20 years is the cause of the deficit in Social Security intake/outlays over the next 50 years.

 

Of course, one might note that we actually mostly solved this problem in the early 1980's...the Baby Boomers agreed to pay a higher tax rate and to have their money built up as a Social Security Trust Fund, which would be drawn down as the baby boom retirement happened. At current projections, this trust fund satisfies all Social Security outlays until at least 2037, and significantly longer if the economy over the next 30 years doesn't underperform the economy of the last 30 years.

 

The problem of course is what happened to the trust fund moneys. They were used to buy Treasury Bonds...which essentially meant that the money became fungible, and that surplus could be spent out of the general fund if you had a President and Congress who were willing to ignore the fact that eventually it was going to have to be paid back. Thus, in the late 1990's, there was in general a government surplus that existed in part because Social Security was running a deliberate surplus. Since Social Security is somewhat regressive (due to the income cap NSS refers to), this was in effect a regressive tax surplus.

 

The Bush tax cuts come into this discussion because that is what we did with the general fund excess; fund top level tax cuts.