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Bipartisan Deficit Panel Recommendations

Obama appointed a bipartisan deficit panel to make recommendations for how to lower the deficit to 3% of GDP. They have completed a draft which has been released and it is a mix of across the board spending cuts including entitlements and defense and broad changes to the tax code (tax increases). It will be interesting to see how this plays out. I think we're screwed. People want to cut the deficit but nobody wants to make a sacrifice.

Deficit Panel's Leaders Push Cuts - WSJ.com

Quote:

WASHINGTON—The leaders of a White House commission laid out a sweeping proposal to cut the federal budget deficit by hundreds of billions a year by targeting sacrosanct areas of U.S. tax and spending policy, such as Social Security benefits, middle-class tax breaks and defense spending.

The preliminary plan in its current form would end or cap a wide range of breaks relied on by the middle class—including the deduction for home-mortgage interest. It would tax capital gains and dividends at the higher rates now levied on wage income. To compensate, one version of the plan would dramatically lower and simplify individual rates, to 9%, 15% and 24%.

For businesses, the controversial plan would significantly lower the corporate tax rate—from a current top rate of 35% to as low as 26%—but also eliminate a number of deductions. It would make permanent the research and development tax credit.

Overall, the plan would hold down the growth of the federal debt by roughly $3.8 trillion by 2020, or about half of the $7.7 trillion by which the debt would have otherwise grown by that year, according to commission staff. The current national debt is about $13.7 trillion.

The budget deficit, or the amount by which federal expenditures exceed revenues each year, was about $1.3 trillion for fiscal year 2010, which ended on Sept. 30.

The interim report by the panel's co-chairmen stands as an opening bid in what will likely be a heated debate over the future of spending and taxes, issues that exploded in the midterm elections. Many of the plan's more provocative elements are intended as starting points for negotiation, not final recommendations.

I'm going to look into this and read it this weekend. But, I think we need to do everything. Eliminate all the tax cuts, lower SS payments, means test some benefits, reduce the costs per student in schools, reduce medical payments by getting healthier, cut 25% of the military (close bases, bring troops back,...) etc...

It is just like losing weight. A person can stay the same weight by doing a little, but to change your weight you need to do more. Our debt is obese and just doing a little will only keep it around 14 trillion.

I just wonder (and China is too) if we are devaluing our currency in order to pay off the debt. (I'll make a new thread about this tomorrow).

Quote:

Originally Posted by ASU2003 (Post 2841109)

I'm a little confused about how lowering SS payments will help close the budget gap and/or lower the deficit. Isn't the revenue for SS generated by it's own tax with the excess revenues going into the SS trust? If that's the case it's entirely separate from the spending problem and all you are going to do is increase the size of the trust.

The SS changes are only for keeping social security solvent and don't affect the overall budget.

Once concern I have is if they get rid of the mortgage deduction what happens to families that have a mortgage and are counting on that deduction to pay their mortgage? Do we begin another round of foreclosures?

After looking into it appears the mortgage deduction would only be discontinued for second homes and the mortgages above $500,000. That doesn't seem so bad as it is clear that people that have two homes or homes worth that much can likely afford it.

I think it is only fair that everyone should have to pay more taxes in order to get things straightened out. I also agree with cutting entitlement benefits but I think the cuts should start now, not decades from now. The baby boomers got us into this mess, they can make a sacrifice to help get us out of it.

I find it hilarious that all the talk of cutting spending is focused on cutting spending for entitlements to the people, but these government schmucks are avoiding cutting their own budgets like it was the plague.