More Debits & Credits Posts

Deficit Commission is at a Loss

November 12, 2010

The draft plan issued by the leaders of the bipartisan deficit commission is not likely to garner the votes of Congress, or even of a majority of the commission’s own members.

The surprise release of the draft plan by the two co-chairs, former Senate Republican Leader Alan Simpson of Wyoming, and Erskine Bowles, the White House chief of staff in the Clinton administration, came weeks before the expected Dec. 1 due date of the full 18-member commission’s final report (see Deficit Panel Unveils Plan).

Among the plan’s already controversial suggestions is raising the Social Security retirement age to 69 by the year 2075, abolishing the alternative minimum tax, gradually increasing the gasoline tax by 15 cents in 2013 to fund transportation spending, lowering the corporate tax rate to 26 percent, and limiting deductions on mortgages above $500,000 and excluding second residences and home equity loans.

As expected, the plan immediately drew criticism and may have been intended to play the bad cop part while the final report comes out seeming like the good cop. However, in order for the commission, officially known as the National Commission on Fiscal Responsibility and Reform, to issue a final report, 14 of the 18 members have to agree on it. So far, that does not appear to be the case, at least with this initial draft. One of the members of the commission, Rep. Jan Schakowsky, D-Ill., told The New York Times, “I think every member of the commission would agree that this is not the plan.”

Indeed, the draft plan looks more like a PowerPoint presentation than a report, but it does contain some good arguments for the need for reform as the national debt and the budget deficit continue to climb by trillions of dollars. The prospects of the plan passing in Congress seem fairly remote these days, however, especially as the Obama administration appears ready to give in to demands to extend the Bush tax cuts for both the wealthy and the middle class, adding another $4 trillion or so to the national debt for the foreseeable future. The only question these days seems to be how “permanent” the tax cut extension should be , when “permanent” only means until the next administration or Congress gets into office.

Comments (1)
The recommendations of most committees, government or private usually end up in the circular file or what are passed is vastly different from the original. Result is the problems remain but are much bigger than when the committee formed.

Fixing the problem will require much pain and sacrifice which most will not bear. The US has "fixed" SS, Medicare, Medicare a number of times but the fix is temporary. When it comes to the pain, NIMBY is the response.
Posted by Surewewill | Friday, November 12 2010 at 9:02AM ET
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