Wednesday, November 10, 2010

Deficit Commission Draft Proposal

by Calculated Risk on 11/10/2010 01:29:00 PM

From the NY Times: Panel Weighs Deep Cuts in Tax Breaks and Spending

A draft proposal to be released Wednesday by the chairmen of President Obama’s bipartisan commission on reducing the federal debt calls for deep cuts in domestic and military spending starting in 2012, and an overhaul of the tax code to raise revenue.
...
The plan would reduce Social Security benefits to most future retirees ... and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.

But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama ...

The proposed simplification of the tax code would repeal or modify a number of popular tax breaks — including the deductibility of mortgage interest payments [and the exemption from taxes for employees’ health benefits] — so that income tax rates could be reduced across the board.
I doubt the mortgage interest deduction will be eliminated, but maybe it could be reduced over time. Same with the exemption for health benefits. I'd prefer if they left Social Security out of this proposal completely, and just addressed the General Fund deficit. Then, after reaching agreement on the General Fund deficit reduction, they could return to Social Security in the future.

Oh well, this proposal will probably end up with most other commission reports - gathering dust (well, mostly digital dust these days).