The details of the proposal have yet to be released. But a five-page draft outlines a plan to cut deficits by $3.7 trillion over 10 years. Key elements include:
- A new bill that cuts $500 billion in discretionary spending over 10 years, including defense spending.
- An immediate freeze of congressional pay and the sale of unused federal property.
- New discretionary spending caps through 2015.
- A requirement that congressional committees report legislation within six months to find billions in savings in entitlement programs over 10 years.
- Creation of a 67-vote threshold to make it more difficult for Congress to exceed its spending caps.
- A longer-term overhaul of the tax code, eliminating many tax breaks and using the savings to reduce marginal income tax rates and pay down the deficit.
- Elimination of the $1.7 trillion Alternative Minimum Tax and the $298 billion Sustainable Growth Rate formula for Medicare (known as the “doc fix”) – provisions aimed at reducing deficits that Congress has routinely bypassed.
- An overhaul of Social Security, but direction of all savings to long-term solvency, not to paying down the debt.
“This is potentially the biggest game changer we’ve had since the debt ceiling discussions began,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget in Washington.
“Instead of political theater with people trying to figure out how to avoid the tough choices, this is a serious plan that would actually address them,” she adds.