Serious players need not apply
The "Deficit" Commission's chairmen issued a set of draft proposals (I put that in quotes because the proposals do not make any sense if the goal is to reduce the deficit). They suggest a whole string of things that are politically impossible or ridiculously small:
- cutting earmarks (less than 1% of the federal budget)
- Send all military children based in the U.S. to local schools (there can't be more than 200 schools on military bases in the entire world, for cryin' out loud)
- Charge admission to the Smithsonian and National Parks (Er, how much revenue would that bring in, really?)
- Cut $900 million in fossil fuel research funds ($900M is a drop in an eyedropper in the federal budget, and if that is meant to develop cleaner methods of extracting energy from coal, then why would we want to eliminate it? There's more coal in this country than any other energy-producing natural resource)
Then they have various proposals for Social Security:
- 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.
But then they get to what I suspect the real goal has been all along: cutting taxes for the rich.
- 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 by 15 cents per gallon.
So, reduce the maximum rate and exempt personal and corporate income earned abroad. Just which class of people would benefit from that, do you suppose?
Now, remember, Erskine Bowles and Alan Simpson, the co-chairs, are regarded as Very Serious People, so the media will admire their strength of character in proposing such "hard but necessary changes" while ignoring the tax implications.
This should die of laughability on its merits.
Posted by Linkmeister at November 10, 2010 11:12 AM
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