In what some have called an anti-climactic end to an eight-month ordeal, President Obama’s “National Commission on Fiscal Responsibility and Reform” released its final report on what to do about the deficit and debt. Not much is expected to result from this report, in part because much of it won’t be approved by the commission itself. Although approved by a majority of the commission’s members, 14 of the 18 members must approve the final product for it to actually get passed by the panel. And even then, Congress is not obligated to create legislation based on the panel’s recommendations.
At 59 pages, it is too long for me to read when I’ve got finals to study for, so I’ll just give you a synopsis based on Jon Ward’s reporting at The Daily Caller.
Coming in at a modest 59 pages, the report, titled, “The Moment of Truth,” was full of detail, and full of spending cut pain for virtually every interest group in Washington, with $3.9 trillion of reductions to the federal deficit by 2020.
Overall, the plan hewed fairly closely to the draft released by co-chairs Alan Simpson and Erskine Bowles earlier this month, and is fairly conservative in its approach, though anti-tax groups will not like it. But compared to the liberal plan released by Rep. Jan Schakowsky, an Illinois Democrat on the commission, the plan is hawkish about the need to cut spending, reform the tax code and make serious changes to Social Security.
The plan recommends reducing the national debt to 60 percent of the gross domestic product by 2023 and 40 percent by 2035, reducing spending to 21 percent of the economy, and capping federal revenues at 21 percent of the economy as well. All of these are measures that reflect a clear concern about the size of government and about the importance of retaining the confidence of the nation’s creditors that the U.S. can repay its debt.
The emphasis on broad tax reform that broadens the tax base to make more Americans pay taxes, while lowering rates simultaneously, also remains in the plan. The report recommends reducing six brackets to three, and going to a system of either 8, 14 and 23 percent, or – if the government retains a number of tax deductions and exemptions – to 12, 22 and 28 percent.
The current brackets are 10,15, 25, 28, 33 and 35 percent, and are scheduled to go up to 15, 28, 31, 36 and 39.6 percent if the Bush tax cuts expire at the end of this year.
The report also recommends lowering the corporate tax rate to 26 or 28 percent, up from its current 35 percent rate.
There are $50 billion in immediate cuts suggested that include some highly symbolic moves, such as a 15 percent reduction in the budgets for Congress and the White House, a three-year freeze on pay for members of Congress, a reduction of the federal work force, a ban on all earmarks, and a reduction in federal travel, vehicle and printing budgets.
As for Social Security, the plan sticks by Bowles and Simpson’s recommendation from earlier this month that the retirement age be raised to 68 around 2050 and 69 around 2075, an idea that was decried by labor unions and the left when they first suggested it earlier this month. That is one of numerous recommended changes to the program, though the report suggests raising benefits for the poorest and oldest Social Security recipients, and recommends increasing payments from wealthier Americans, making it more progressive.
The changes would make Social Security – which is scheduled to become insolvent in 2037 – solvent for 75 years.