There’s been a lot of demand for specifics in the deficit debate, and the leaders of the president’s Fiscal Commission obliged today with a plan they call a starting point for the panel’s discussions. For some on the panel, it may prove to be more of a stopping point, with steep spending cuts and overhauls to the tax code that may not get endorsed by a majority of the members. Everyone who works on this issue says that the choices will be painful, but in the last election specifics on those choices were in short supply. This plan, even if it never goes any further, is probably where the real argument about what it’s going to take to solve our budget problems begins.
Deficit Commission Leaders Offer $3.8 Trillion “Starting Point”
The presidential deficit commission isn’t due to make its report for several weeks, but its two co-chairmen, Erskine Bowles and Alan Simpson, set out what they called a “starting point” plan today that includes cuts to Social Security and Medicare, as well as reductions in income tax rates in exchange for curbing tax breaks. Overall, they say their proposal would cut $4 trillion from the deficit through 2020, stabilize the debt by 2014, and keep Social Security solvent for the next 75 years. The plan both cuts spending and raises revenue, but leans more on the spending side (about $3 of spending cuts for every additional $1 of revenue). Even before the plan was released, however, members of both parties were expressing doubts (and remember, the commission’s mandate requires 14 of 18 members to agree on any recommendations).
U.S. debt proposal would cut Social Security, Medicare and Panel Weighs Deep Cuts in Tax Breaks and Spending
Here’s how Bowles and Simpson describe the key points in their presentation:
Our plan makes five basic recommendations:
- Enact tough discretionary spending caps and provide $200
billion in illustrative domestic and defense savings in 2015.
- Pass tax reform that dramatically reduces rates, simplifies the
code, broadens the base, and reduces the deficit.
- Address the “Doc Fix” not through deficit spending but through
savings from payment reforms, cost-sharing, and malpractice
reform, and long-term measures to control health care cost
growth.
- Achieve mandatory savings from farm subsidies, military and
civil service retirement.
- Ensure Social Security solvency for the next 75 years while
reducing poverty among seniors.
Even the Powerpoint version of this plan runs to 50 pages, which you can read at the commission site.. Even if the chairmen get 14 members of the commission to back their plan, which is far from a done deal, President Obama and Congress don’t have to accept any of this. But it will probably set up the initial discussion.
Panel Calls for a Better Budget Process
The procedures used when Congress makes budgets, or fails to make them, is a complicated contraption even when things run smoothly. (This interactive feature in the Wall Street Journal tries to make the process clear, but the very fact that it takes up eight slides tells you something). Would a better process make for better budgets? The Peterson-Pew Commission on Budget Reform thinks so. Their new report, released this morning, calls for “Three Ts”: setting fiscal targets, establishing automatic budget triggers, and more transparency, all established in a “Sustainable Debt Act.”
Lots of organizations (including the Committee on the Fiscal Future) have called for national budget targets and more transparency. The most controversial part of the plan will probably be the idea of “triggers,” where spending cuts and tax increases would go into effect automatically if the government misses its targets.
You can read the full report on Getting Back in the Black .
And There’s More on the Way
The Peterson-Pew commission report is only one in a series of bipartisan budget plans coming out this month, as “some of the best minds in Washington” try to influence the biggest plan of them all, the presidential deficit commission report due Dec. 1, reports the Washington Post. But any action by Congress might be put off until the spring.
Panels tackling deficit, but doubts remain that consensus can be forged
Congress may have enough problems just passing a temporary spending bill to keep the government going. It could be $1 trillion, and it has to be done by Dec. 3, says the Wall Street Journal.
As Congress Returns, Tough Vote Looms on Spending Bill
Two Democratic senators offer a compromise, linking a temporary extension of the Bush tax cuts to an overhaul of the tax code.
Extending Tax Cuts, but With a Catch
The real cure for Medicare’s problems? Healthier seniors, says James Pinkerton at National Review. But Ezra Klein at the Washington Post wonders whether Republicans are in a position where they can’t advance any health care proposal other than repealing the Obama plan.
Chart of the Day
Over the last several decades, there’s been a gradual shift in how the federal government spends its money, and that’s expected to continue as health care costs and an aging population drive up spending on Medicare, Medicaid and Social Security.
To learn more about the numbers that set the stage for some of our choices, check out our slideshow, iPhone and Android apps, and Our Fiscal Future’s Visual Budget Tool.
Fiscal Future Daily is produced by Public Agenda for Choosing Our Fiscal Future, in partnership with the National Academy of Public Administration and with support by the John D. and Catherine T. MacArthur Foundation. The editor in chief is Scott Bittle, with contributors Francie Grace, David White, Jen Vento, Hart Hooton and Tom Watson.
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