A bipartisan task force has issued a plan to cut the size of the national debt and the federal budget deficit through taxes and other means.

The Bipartisan Policy Center’s Debt Reduction Task Force, co-chaired by former Senate Budget Committee Chairman Pete Domenici, R-N.M., and Alice Rivlin, who served as White House Budget Director during the Clinton administration, called for spurring economic recovery by instituting a payroll tax holiday for 2011. Social Security taxes would be suspended for both employers and employees, while steps would be taken to reduce deficits and the debt starting in 2012.

They say their plan would reduce the debt to below 60 percent of the economy, reduce annual deficits to manageable levels, and balance the “primary budget” (everything other than interest payments) by 2014. By doing so, the plan would resolve a crisis that, if not addressed, will raise the risks of an economic crisis and weaken the nation over the long term.

“The two of us share strong beliefs that America must learn to live within its means, that the current budget path endangers the future of our country, and that bipartisan action is urgently needed,” Domenici and Rivlin wrote in “An Open Letter to the American People” that accompanies the plan.

“We believe that [the plan] provides a comprehensive, viable path to restore our economy and build a stronger America for future generations and for those around the world who look to the United States for leadership and hope.”

Specifically, the plan would rein in federal health care spending by reforming Medicare and Medicaid; ensure that Social Security can pay benefits for the next 75 years; find savings in other entitlement programs; freeze both defense and non-defense discretionary spending for several years; establish a 6.5 percent Debt Reduction Sales Tax; and enforce all of these savings through strict budget rules.

The plan would dramatically simplify the tax system, establishing individual tax rates of 15 and 27 percent (from the current high of 35), cutting the corporate tax rate to 27 percent (from the current 35), ending most deductions and credits while simplifying the rest, and ensuring that nearly 90 million households no longer have to file returns.

“We offer this plan as proof that a group of Republicans, Democrats, and Independents can work together to create a balanced package of spending cuts and revenue increases that solves the debt crisis,” Domenici and Rivlin wrote. “Other groups might prefer other combinations of policies to reach the same ends. We created this plan to show that it can be done – and thereby encourage others from both political parties to bring their ideas to a constructive, respectful, and ultimately successful dialogue.”

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