Wednesday, November 10, 2010

A Glimpse of Our Future: The Debt Commission’s preliminary report

Everyone in Washington is buzzing about the Obama’s Debt Commission proposal for cutting the debt by 2015. 
The New York Times: WASHINGTON — The chairmen of President Obama’s bipartisan commission on reducing the national debt outlined a politically provocative and economically ambitious package of spending cuts and tax increases on Wednesday, igniting a debate that is likely to grip the country for years.
The plan calls for deep cuts in domestic and military spending, a gradual 15-cents-a-gallon increase in the federal gasoline tax, limiting or eliminating popular tax breaks in return for lower rates, and benefit cuts and an increased retirement age forSocial Security.
Those changes and others, none of which would take effect before 2012 to avoid undermining the tepid economic recovery, would erase nearly $4 trillion from projected deficits through 2020, the proposal says, and stabilize the accumulated debt.
“It’s time to lay it out on the table and let the American people start to chew on it,” said Alan K. Simpson, the former Republican Senate leader who is one of the co-chairmen, along with Erskine B. Bowles, who was White House chief of staff under President Bill Clinton.
Their outline will be the basis for negotiation within the commission, which has a Dec. 1 deadline for submitting a final plan. It represents a challenge to both parties: to Mr. Obama and the Democrats, to show in the wake of the midterm election that they are serious about their pledges to address long-term deficits, and to Republicans, who for the most part have ruled out consideration of tax increases even as they have promised new adherence to fiscal responsibility. [MORE]
For the full list of proposed cuts and changes see the PDF file here.  It must also be noted that they are quite serious about this being a starting point. This is because as deep as some of these cuts and changes seem, they don’t completely eliminate our debt.
Bloomberg: 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.
I am still reading the proposal, but from what I see some of it makes little sense to me.  For example why add a gasoline tax without first creating a solid energy policy that takes us off foreign sources.  It seems like asking for trouble. There are also no incentives for growing the economy which would drastically help to reduce our debt. I also don’t see that boondoggle ObamaCare on the chopping block.
Where this proposal does succeed is in starting the much needed conversation about our nation’s finances.  What is desperately needed now that the conversation has begun is for adults to take over, adults who can impress upon the nation that the day of reckoning is here. We need adults who can tell the nation that we can no longer afford to have sacred cows like Social Security and other entitlements; everything must be put on the table. Silly political hacks like Nancy Pelosi who don’t even want to consider drastic changes after irresponsibly running up the debt must be told to sit quiet in the corner.
As the conversation goes forward, we should all start learning an important lesson from all of this.  The lesson is, never again should allow ourselves to be forced into a desperate situation by politician who are more interested in their own futures rather than the nation’s at a whole.
Via: New York Times                                                            
Via: Twitter

1 comment:

Nick Rowe said...

It's almost total crap. The parts that make sense aren't politically feasible.

The solution to Social Security is a complete privatization, not a partial one. We need ownership and control of our retirement, not empty promises and redistribution. Putting revenues into the Trust Fund is swapping one IOU for another IOU. We need to preserve the promise, not save the system.

We already tax gasoline too much.

You can't just cut Medicare payments to doctors and expect them to continue taking Medicare.

Eliminating the mortgage interest deduction for current homeowners is outrageous; we made a home buying decision based on that. Cutting them for future purchases is a great idea. It will stil hurt current home owners through lower demand for housing.

A flat income tax of 15% would be ideal with a $25,000 exemption and no deductions except for medical, education, and retirement savings.

Fannie and Freddie need to disappear.

Medicare just needs cuts in benefits...period. People can save tax free to close the gap.

There is still tons of fat in the budget to cut before we reduce military readiness. There are still a lot of assholes in the world that need killin'.

Anything which isn't a Public Good needs elimination. Entire government departments can go away and necessary functions absorbed by remaining ones or in smaller bureaus. HUD, DHHS, Ag, Energy, Education, Transportation: gone.

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