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A proposal destined to upset every single American citizen and politician. In other words, a sound plan that gives us exactly what we need, but isn't what we want.
http://www.bloomberg.com/news/2010-1...deduction.html
A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would cut Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.
The co-chairmen of the panel appointed by President Barack Obama suggested reducing Social Security spending by raising the retirement age to 68 in about 2050 and 69 in about 2075. The plan also would slow the rate at which benefits grow. The savings would come between 2012 and 2020.
“This country’s out of money and we better start thinking,” said co-chairman Erskine Bowles. Without “tough choices,” he said, “we’re on the most predictable path toward an economic crisis that I can imagine.”
Bowles, former President Bill Clinton’s chief of staff, and Republican former Senator Alan Simpson of Wyoming announced the proposal in Washington today, stressing that it was intended as a starting point for discussion.
None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent.
Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said.
Bowles said about three-fourths of the savings would come from spending cuts with the remainder from tax increases.
‘Harpooned Every Whale’
“We have harpooned every whale in the ocean and some of the minnows,” Simpson said. “No one has done this before.”
The proposal would attempt to slow health-care costs by paying doctors participating in Medicare less, and it calls for “comprehensive” legislation to reduce medical malpractice costs.
Discretionary spending cuts in the plan include reducing congressional and White House budgets by 15 percent, freezing federal salaries and cutting the federal workforce by 10 percent. The discretionary reductions of $1.4 trillion would be split equally between defense and domestic programs, Bowles said.
“The cuts really will happen on both sides of that firewall,” he said.
The plan would cut the deficit to 2.2 percent of gross domestic product by 2015, from the current 9 percent, exceeding Obama’s goal. It would also reduce debt to 60 percent of GDP by 2024.
“This is Al’s and my proposal, nobody else’s,” Bowles said. “The president hasn’t seen this proposal.” Some members of Obama’s financial team have seen the plan and they liked some things and not others, he said.
A proposal destined to upset every single American citizen and politician. In other words, a sound plan that gives us exactly what we need, but isn't what we want.
The timing of the release is interesting.
It originally wasn't supposed to be released until right at Christmas.
"The co-chairmen of the panel appointed by President Barack Obama suggested reducing Social Security spending by raising the retirement age to 68 in about 2050 and 69 in about 2075. The plan also would slow the rate at which benefits grow. The savings would come between 2012 and 2020."
This is totally unnecessary bull , and totally expected by the composition of the commission, eg, Pete Peterson.
There are other EASY ways to fix/replace the pilfering of Soc Sec funds.
But is he counting Obamacare making us money. BUWHAHAHAHAHAHAHAHAHAHAHAHAHA
Boutons, I don't think grinding up Repugs and selling them as soylent green is gonna work.
Wiping out "all" income tax breaks could be a political stumbling block.
Do tell.
That one made me chuckle.
How much is saved by raising the retirement age a year?
Last edited by Spurminator; 11-10-2010 at 05:04 PM.
I guess the theory goes like this. Pay doctors less for medicare patients. Doctors reduce the number of medicare patients they're willing to see. Less medicare patients being seen by doctors equals less incentive for doctors to overcharge non-medicare patients to make up for losses from seeing medicare patients. Growth in medical costs slow as a result. At least that's all I can come up with.
Certainly sucks if you're one of those medicare patients. But there's no way to get out of the financial hole we find ourselves in without every American getting kicked in the balls in some form or fashion.
I wonder where the 8 / 14 / 23 breaks would be.
And yes, the full SS retirement age should continue to rise; no reason it should stop at 67 given the expected increases in life expectancy.
This will cost us a boatload, because we write off home interest and charitable deductions (a lot more in the former than the latter). But the home interest is going down since we're on a 15-year note so it would just end up a little faster than we expected.
No chance in our gutless representatives would ever vote for something so progressive.
Update with a few more details:
http://www.bloomberg.com/news/2010-1...-medicare.html
A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would trim Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.
The plan would overhaul the federal budget by throwing out hundreds of tax breaks for items such as capital gains and child care. It would raise the gas tax, slash defense spending and bring down health-care costs by clamping down on medical malpractice suits. The Social Security retirement age would be raised to 68 in about 2050 and 69 in about 2075.
“This country’s out of money and we better start thinking,” said Erskine Bowles, co-chairman of the panel created by President Barack Obama. Without “tough choices,” Bowles said, “we’re on the most predictable path toward an economic crisis that I can imagine.”
Bowles, former President Bill Clinton’s chief of staff, and Republican former Senator Alan Simpson of Wyoming announced the proposal in Washington today, stressing that it was intended as a starting point for discussion.
The savings would come between 2012 and 2020. The result would be a deficit totaling about $400 billion or about 2.2 percent of the nation’s gross domestic product in 2015. That would exceed Obama’s goal for the panel of a reduction to 3 percent, from the current 9 percent of GDP.
White House spokesman Bill Burton said in an e-mail the proposals “are only a step in the process towards coming up with a set of recommendations.” He said Obama wants to give the panel “space to work on it” and wouldn’t comment on the plan.
Lawmakers Balking
The chairmen’s plan is already causing some Democrats and Republicans on the 18-member commission to balk. While most economists say some combination of spending cuts and tax increases is necessary, Republicans are wary of tax hikes and Democrats are reluctant to reduce U.S. government benefits.
“This is not a package that I could support,” Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission before the chairmen released details of their plan. She said any package able to win the necessary 14 votes on the panel would have to look “very different” from the options under discussion.
None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent.
Mortgage Deduction
Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said.
Bowles said about three-quarters of the savings would come from spending cuts with the remainder from tax increases.
“We have harpooned every whale in the ocean and some of the minnows,” Simpson said. “No one has done this before.”
The proposal calls for discretionary spending to be cut by $1.4 trillion over 10 years, while mandatory spending -- including Social Security, Medicare and Medicaid -- would be reduced by $733 billion. Taxes would be raised by $751 billion, including a 15-cent increase in the gas tax starting in 2013.
Tax increases would begin in 2012, when they would total $69 billion. They would ramp up to $372 billion in 2015, $588 billion in 2018 and $761 billion in 2020.
Farm subsidies would be cut by $3 billion a year. The proposal would also attempt to slow the growth of health-care costs by paying doctors participating in the Medicare health program for the elderly less and calling for “comprehensive” legislation to reduce medical malpractice costs.
Freezing Federal Salaries
Discretionary spending cuts in the plan include reducing congressional and White House budgets by 15 percent, freezing federal salaries and cutting the federal workforce by 10 percent. The discretionary reductions would be split equally between defense and domestic programs, Bowles said.
The plan calls for $100 billion in defense cuts, including freezing federal salaries and noncombat military pay at 2011 levels for three years and reducing spending on research and development and on facilities maintenance.
The government is projected to run $8 trillion in deficits over the next 10 years, which would push the national debt up to more than $20 trillion.
The panel’s goals drew praise from Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, a Washington-based group that advocates balanced budgets. The plan “would fix our fiscal problems and truly reflects a balanced compromise across party lines,” she said.
Some of the plan would be painful, she said, “but we must be mindful of the consequences if we fail to act.”
Simpson said the plan was designed to give members of the panel something to “chew on” for further discussions.
‘Witness Protection’
“This is Al’s and my proposal, nobody else’s,” Bowles said. “The president hasn’t seen this proposal.”
Some members of Obama’s financial team have seen the plan and they liked some things and not others, he said. Asked how interest groups would react, Bowles joked, “we’re going to be in the witness protection program.”
Senator Durbin, an Illinois Democrat, called the plan a “starting point for the conversation.”
“We’re not going to have an up-or-down vote on this,” said Durbin. “There are proposals in there that are painful. I told them I said there are things in here which inspire me and other things which I hate like the devil hates holy water. I’m not going to vote for those things.”
Some Republicans also expressed skepticism that the report would survive in its current form. New Hampshire Senator Judd Gregg called the plan a “starting point.”
Representative Jeb Hensarling of Texas said “some of it I like, some of it
disturbs me.”
To contact the reporters on this story: Heidi Przybyla in Washington at [email protected]; Brian Faler in Washington at [email protected];
To contact the editor responsible for this story: Mark Silva at [email protected]
In France, when they announced they were raising the retirement age from 60 to 62, the frogs went into full riot mode. (that's why we don't want to become like them)
It makes sense to raise the retirement age, since we are living so long now (even with our so-called poor health care system).
I don't agree with taking away the home mortgage deduction. WTF?
It may make sense to raise the retirement age but I'm still curious about how much real savings that creates, and whether that couldn't just be offset with a slight adjustment of the income tax cuts or SS payments.
68 year-olds may have a longer life expectancy today than they used to but are they really that much more capable of working? What's to stop voters/lawmakers from repealing the change in 2048?
Longer life expectancy is a fundamental benefit of living in a great country. If that means enjoying the fruits of retirement a few years longer than we will or than our parents did... well, good!
Last edited by Spurminator; 11-10-2010 at 05:53 PM.
Congrats Darrin, you've captured the entire issue and all the complications associated therewith in one post.
yep, the French have some balls, enough to scream when they're getting buggered by the wealthy.
The dumbed-down American sheeple have large anal openings from being reamed, taking it passively.
Ah yes. The french riot at the audacity of someone trying to cut back their freebies. How noble.
Cuban's article mentioned $733B worth of cuts over 10 years to SS&M. Not sure what the split between SS and medicare/medicaid is, but it's got to be significant. Certainly in the hundreds of billions.
Could that $ be offset from some other source? Sure, but that kinda defeats the purpose of the exercise here.
We're only talking about 1 or 2 years. Depends on the job I guess. Even then, there's a difference between age you retire and age you start collecting SS money. If you want to retire before you can collect SS, save enough money to sustain yourself for that in between period. You should be saving anyways because the odds of you being able to live 100% off SS in retirement are damn slim.68 year-olds may have a longer life expectancy today than they used to but are they really that much more capable of working?
Nothing. Doesn't mean we shouldn't go ahead and make the change now though.What's to stop voters/lawmakers from repealing the change in 2048?
Sure it's good, but that doesn't make it the obligation of the taxpayers to fund those extra years. Especially considering the current situation where there's simply not enough cake for everyone to get the piece that they'd like.Longer life expectancy is a fundamental benefit of living in a great country. If that means enjoying the fruits of retirement a few years longer than we will or than our parents did... well, good!
If we're to regain fiscal sanity in this country, en lements have to be cut. Period.
To be honest, it's hard enough finding a compe ive job when you're 50. I can't even fathom what it's like to be looking for a job at 65.
Plus the problem isn't that the people didn't put in enough money in the system to retire at 65, it's that said money was already spent. The average life expectancy in the US is somewhere between 75-80 years old.
69 yr old Social Security.Dayum, have fun with that. Tax free roth withdraws at 59.5 is where it's at.
Let us opt out!
Last edited by BlairForceDejuan; 11-10-2010 at 09:48 PM.
Yup.
Eliminate all tax breaks?
Right choice to simplify the code, but man will everybody scream bloody murder.
My dad is 66 this year. He has almost no computer skills whatsoever. The job market was not kind to him.
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