The Chairmen of Obama's fiscal commission just released their "Chairman's Mark". This is the proposal they are taking to the other members of the committee for debate before voting. It requires 14 of the 18 to agree to the plan, and then they'll send it to Congress.
There are some good ideas in the report. But those are offset by this gem: they propose a massive (additional) tax cut for the wealthy.
The report can be viewed here.
NY Times Article:
Talking Points Memo
There are some good ideas in the report. But those are offset by this gem: they propose a massive (additional) tax cut for the wealthy.
The report can be viewed here.
NY Times Article:
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 Securitys 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 chairmens sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nations 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.
But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmens sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nations 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.
Talking Points Memo
Social Security cuts
Tax reform
Discretionary spending cuts
- Index the retirement age to longevity -- i.e., increase the retirement age to qualify for Social Security -- to age 69 by 2075.
- Index Social Security yearly increases to inflation rather than wages, which will generally mean lower cost of living increases and less money per average recipient.
- "Increase progressivity of benefit formula" -- i.e., means test part of Social Security benefits by 2050.
- Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that's only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.
Tax reform
- The co-chairs suggest capping both government expenditures and revenue at 21% of GDP eventually.
- In their first plan, called "The Zero Plan," they suggest reducing the tax brackets to three personal brackets and one corporate rate while eliminated all credits and deductions. Without any credits or deductions (including the ETIC and mortgage interest deductions), the 3 tax rates would be 8, 14 and 23 percent.
- In their second plan, they would increase the personal deduction to $15,000, create 3 tax brackets (15, 25 and 35%); repeal or significantly curtail a number of popular tax deductions (including the state and local deduction and the mortgage interest deduction); and eliminate other tax expenditures.
- The third plan would force Congress to undertake comprehensive tax reform by 2012 by raising taxes for each year Congress fails to act.
- All their proposals limit Congress to collecting taxes on income made within the United States, reducing or eliminating taxes on American expats and revenues companies earn abroad.
- They also suggest raising the federal gas tax to 15 cents per gallon in 2013.
Discretionary spending cuts
- Freeze federal worker wage increases through 2014; eliminate 200,000 federal jobs by 2020; and eliminate 250,000 federal non-defense contractor jobs by 2015.
- Establish co-pays in the VA medical system and change the co-pays and deductibles for military retirees that remain in that system.
- Eliminate NASA funding for commercial space flight.
- Require the Smithsonian museums to start charging entrance fees and raise fees at the national parks.
- Eliminate funding to the Corporation for Public Broadcasting -- which many conservatives suggested in the wake of the firing of former NPR contributor Juan Williams.
- Reduce farm subsidies by $3 billion per year.
