Who will be upset by panel's proposal on national debt? Nearly everyone.
The co-chairs of Obama's deficit-reduction panel issued a proposal to reduce the national debt by $4 trillion in 10 years. But the budget cuts and tax increases promise to anger just about everyone.
The co-chairmen of President Obama’s deficit-reduction panel issued a draft proposal Wednesday outlining ways to achieve a nearly $4 trillion reduction in national debt over the next 10 years. Among other things, they urge deep cuts in domestic and military spending, raising the retirement age to 69, and ending or curbing popular tax breaks such as the deduction for mortgage interest.
Whose hair will light on fire as they peruse this interim report? Plenty of people. It includes something to make folks of almost every political persuasion mad.
But that may be a point of pride for the leaders of the bipartisan deficit panel, Erskine Bowles, a former chief of staff for President Bill Clinton, and Alan Simpson, a former Republican US senator from Wyoming. They appear to be trying to wake up official Washington to the scale of the problem and the scope of needed solutions.
“A sensible, real plan requires shared sacrifice – and Washington should lead the way and tighten its belt,” said the pair in their draft.
So who won’t like this, and why? Here's a partial list here to give you an idea:
The co-chairs’ proposal would take a paring knife to the big entitlement programs upon which Democrats have built their political appeal for decades. Medicare beneficiaries would have to pay more toward the cost of their health coverage, while the amount Medicare would pay for catastrophic medical conditions would be capped, for instance. The Social Security retirement age for full benefits would rise gradually to 69, for example, while cost-of-living benefit increases would be reduced.
The deficit panel co-chairmen say Social Security needs to be reformed for its own long-term health, as opposed to deficit reduction. But the program’s advocates are suspicious.
“What is really happening is cuts advocates are using the Social Security funds ... to reverse other federal programs that do have deficits or are unpaid [for], and to pay for the tax breaks for the wealthy,” said Robert Weiner, former chief of staff of the House Aging Committee.
The proposal raises taxes, which the GOP in general, and tea party adherents in particular, might not like. Every three dollars in spending cuts would be matched by one dollar in revenue enhancements, according to Mr. Bowles and Mr. Simpson. The level of income to which the payroll tax applies would rise, for instance. Popular tax deductions, such as those for mortgage interest and state and local taxes, would be ended.
The gasoline tax would go up by 15 cents a gallon to fund transportation programs.
Generals. The military and defense contractors would face bleaker financial futures under the co-chairs' proposal. The armed forces are a large part of the US budget, and deficit reduction is difficult unless they share the pain, argue Bowles and Simpson. Illustrative suggested cuts include a 15 percent reduction in weapons procurement, a 10 percent reduction in research and development spending, and a three-year freeze on wages for Defense Department personnel.
Lawyers. The proposal includes promises of significant tort reform for medical malpractice cases as a way of lowering America’s health-care costs. This is something trial lawyers (and their largely Democratic political patrons) have resisted for years, saying it would deprive those truly harmed of a chance at redress in the legal system.
Farmers. Agriculture subsidies would be reduced by $3 billion annually under the proposal.
Students. Bowles and Simpson would eliminate in-school interest subsidies for student loans.
Bureaucrats. Government workers would have to pay in more towards their retirement plans under the co-chairs’ plan.
We could go on, but you probably get the picture. The possible pain is so widespread that it is unlikely Bowles and Simpson will get the nine other Democrats and seven other Republicans who serve as members of their panel to sign on to the plan as it is. If 14 of the 18 total commissioners agree, then the plan gets sent to Congress for a vote in December.
So who likes the plan? Washington’s corps of deficit hawks, that’s who.
The proposal “represents a commendable, comprehensive, aggressive and good-faith effort to address our nation’s structural deficit,” said David Walker, a former Comptroller General of the US who is now CEO of the Comeback America Initiative.