Deficit panel leaders' plan curbs Social Security and Other Sacred Cows

[MasterBlaster]

This should get a lot of press. Round 1 of unaffordable entitlements bills coming due. Expect lots of screamin' and Moanin' going forward.

Deficit panel leaders' plan curbs Social Security - Yahoo! News-

The leaders of President Barack Obama's bipartisan deficit commission launched a daring assault on mushrooming federal deficits on Wednesday, proposing reducing annual cost-of-living increases for Social Security, gradually raising the retirement age to 69 and taking aim at popular tax breaks such as the mortgage interest deduction.

 

[bssc]

"We'll both be in a witness protection program when this is all over, so look us up," Simpson told reporters.

No one wants their programs cut but think that other people's programs are wasteful. This should be interesting.

 

[MuirWannabe]

My first reaction. I think I like it (said with wavering conviction). Beware of first reactions.

But it should start some healthy discussions unless it gets the stupid DOA reaction from parties in Congress.

 

[dex]

I don't see much happening unless Obama gets re-elected.
2011 a lot of gridlock, republicans will focus on other items
2012 re-election year no one will push it

 

[FIREd]

Better-off beneficiaries would receive smaller Social Security payments than those in lower earning brackets under the proposal.

Here comes means-testing...

Not a bad plan overall IMO, but I can't see it garnering much support from either side. Even the tea partiers dare not speak aloud of cuts to social security and medicare benefits.

The solutions to our problems will have to come from the center of the political spectrum to enjoy broad, bipartisan support IMO. There are too few moderates left standing for our problems to get solved any time soon.

 

[dex]

Here comes means-testing...

I don't think it will be called means testing but the effect might be the same. More of your SS will be included in taxable income as your income increases.

This is how it is done now.
http://www.smartmoney.com/personal-...ocial-security-benefits-be-taxed-again-21987/

 

[MichaelB]

Deficit Reduction Commission draft report

The commissions formal recommendations will come from this report.http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf

Five Part Plan

Our plan makes five basic recommendations:

1. Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.

2. Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.

3. Address the Doc Fix not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.

4. Achieve mandatory savings from farm subsidies, military and civil service retirement.

5. Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

There has been much forum discussion on many of these items, so interested members should review the proposal. It is in powerpoint format, easy to browse. Some highlights:

Social Security indexing should be based on chained CPI. This is an inflation calculation that takes into consideration more substitution of goods and therefore calculates a lower real net CPI over time. In addition, means test, increase the retirement age and broaden the tax base (raise the upper limit).

Federal employees should contribute a greater amount to their own retirement.

Tax code should simplify to fewer, lower rates with few or no deductions.

Health care costs should be contained with a Doc fix - asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth.

Some specific cost cuts are also mentioned.

 

[Gone4Good]

If I read the press correctly, neither Republican nor Democratic members of the commission are endorsing the report . . . that must mean the proposal achieves a fair balance that will actually correct the problem. It also means that the children we've elected to represent us will use this occasion to misrepresent the report and then use those misrepresentations as justification for doing absolutely nothing. We've seen this movie before.

 

[MasterBlaster]

Nothing will happen until a crisis occurs. Something like Greece has recently seen.

 

[MichaelB]

The final report requires the approval by 14 of the 18 members. That is not easy - so what they want but cannot get into the final report - they just release under another name with no votes.

Regardless of what people think about the process, the report is important because it reflects how our political leadership views the tax and spending challenges we face and what the remedies are. Implementation of some of these recommendations will be attempted over the next couple of years for sure.

 

[jebmke]

Always amazed how complicated they make it.

If whack(Social Security, Medicare, Defense)=no, tax) else deficit.

 

[W2R]

Despite its slim chances of survival, the Bowles-Simpson proposal illustrates the painful choices involved in tackling a deficit that presently requires the government to borrow 37 cents out of every dollar it spends.

(emphasis mine)

OK.... so I guess this is all an exercise to evaluate public response to these ideas.

 

[MichaelB]

(emphasis mine)

OK.... so I guess this is all an exercise to evaluate public response to these ideas.

Yes. Also to gauge reaction by affected interests. In general that would not be a bad approach. The drawback here is the report is really a "take it or leave it", and broken up won't achieve the objectives.

Still, this is the first time I have seen what folks in Washington are thinking about doing - not in soundbites or political speech but actual measures.

 

[Midpack]

It is a good start, and I wish we could see some of this come to pass in some form, but I'm not holding my breath.

 

[fisherman]

If I read the press correctly, neither Republican nor Democratic members of the commission are endorsing the report . . . that must mean the proposal achieves a fair balance that will actually correct the problem. It also means that the children we've elected to represent us will use this occasion to misrepresent the report and then use those misrepresentations as justification for doing absolutely nothing. We've seen this movie before.

+1

 

[clifp]

It is a good start, and I wish we could see some of this come to pass in some form, but I'm not holding my breath.

I agree it is a very good start. I particular like either one of their tax proposals which replace our current mess of tax deductions with a very large standard deduction (15K individual, 30K couple). I suspect this would enable many Americans to file a 1040a and save many hours of dealing with taxes. I'd of course be hurt by the elimination of special tax treatment of capital gains and dividends, but not an unreasonable sacrifice.

I was disgusted watching the politicians and talking heads on CNN,Fox, and MSNBC blast the proposal from their very partisan positions. No new taxes scream the Republicans, 75% of the saving are from cuts, including the poor seniors, screams a Democrat commission member. Honestly a pox on both of them.

 

[cb7010]

What's Wrong With Means Testing?

The reality is that social security cannot continue to exist in it's current form..it's underfunded, it's broken. So, what happened? We gave the government a bunch of our "retirement" money to manage for us and they squandered it. Personally, I am for rethinking the entire concept of social security based on what we have learned about the government's ability to manage our retirement investments. But, that doesn't seem to be a popular idea for some reason?

One obvious fix to me is to only give social security money out to those who truly need it to survive. If I have a million dollars in the bank, I simply do not need a government subsidy/handout to survive, so I shouldn't qualify and that doesn't hurt my feelings one bit! If we did this, then I would assume the system would immediately become solvent and likely we could reduce contributions into it, having more of our own money to invest privately and still taking care of the needy in our society

And, what about the "promises" to those, including myself, who have paid into the system for many years? Again, the reality is that the government has squandered the money, they screwed us, and it certainly isn't the first time a group of elected officials have reneged on promises. It really should be a lesson to us about entrusting the government to manage our money and take care of us.

 

[dex]

If I have a million dollars in the bank, I simply do not need a government subsidy/handout to survive, so I shouldn't qualify and that doesn't hurt my feelings one bit!

Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

 

[dex]

What isn't in the proposal - VAT - is surprising. Maybe they are holding that in reserve.

 

[travelover]

................
And, what about the "promises" to those, including myself, who have paid into the system for many years? Again, the reality is that the government has squandered the money, they screwed us, and it certainly isn't the first time a group of elected officials have reneged on promises. It really should be a lesson to us about entrusting the government to manage our money and take care of us.

This would be a unique position for a candidate to take to the voters. I wonder if they should test it first on a smaller sample to get a reaction......

 

[FreqFlyer]

If I read the press correctly, neither Republican nor Democratic members of the commission are endorsing the report . . . that must mean the proposal achieves a fair balance that will actually correct the problem. It also means that the children we've elected to represent us will use this occasion to misrepresent the report and then use those misrepresentations as justification for doing absolutely nothing. We've seen this movie before.

Well said.

I like the idea of lowering the tax rates in exchange for elimination of deductions. We need to simplify the tax code.

I don't have high hopes of any real progress being made soon. I'm too cynical. I'm curious to see polling data on the public's reactions to the sacrifices that will eventually be required.

 

[samclem]

Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

I think qualifying for Medicaid fits this. You've gotta be broke.

 

[FinanceDude]

This should get a lot of press. Round 1 of unaffordable entitlements bills coming due. Expect lots of screamin' and Moanin' going forward.

Deficit panel leaders' plan curbs Social Security - Yahoo! News-

Is Paul Ryan on that commission? If not, shame on POTUS. Ryan makes the most sense about these matters of anyone........

 

[samclem]

Is Paul Ryan on that commission? If not, shame on POTUS. Ryan makes the most sense about these matters of anyone........

Yes, he's on it. All the current officeholders who are on the commission are hanging their necks out if they vote for a final recommendation that skewers any of their own sides' sacred cows.

This is a trial balloon, obviously. I'm glad the White House hasn't joined the chorus of those shouting down the effort based on this first release of "what we're thinking about" info. Lots of other folks have gone straight into orbit, making themselves and their groups sound ridiculous. All the interest groups want to scream murder and move the starting line right now before the hard negotiations/trading begins.

 

[samclem]

Here's a link to a brief Reuters "Factbox" listing the panel's members and their backgrounds.