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November 10, 2010 in Business, Nation/World
Deficit panel leaders’ plan curbs Social Security
Proposal would gradually raise retirement age to 69
WASHINGTON — The leaders of President Barack Obama’s bipartisan deficit commission launched a daring assault on mushrooming federal deficits today, 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.
As part of a proposal to wrestle $1-trillion-plus deficits under control, their plan would also curb the growth of Medicare. It came a week after voters put Republicans back in charge of the House and told Washington that the government is too big.
However, the plan by Chairman Erskine Bowles and former Sen. Alan Simpson, the co-chairman, doesn’t look like it can win the support from 14 commission members that is needed to force a debate in Congress. Bowles is a Democrat and was former President Bill Clinton’s White House chief of staff. Simpson is a Wyoming Republican.
The two were among the first to acknowledge their plan’s unpopularity — and to suggest it would be a nonstarter in Congress.
“We’ll both be in a witness protection program when this is all over, so look us up,” Simpson quipped to reporters. Bowles said: “We’re not asking anybody to vote for this plan. This is a starting point.”
The White House reserved judgment. “The president will wait until the bipartisan fiscal commission finishes its work before commenting,” said White House spokesman Bill Burton. Burton called the proposals “only a step in the process.” He said Obama respects the panel’s challenging assignment “and he wants to give them space to work on it.”
The proposals were floated as the Treasury Department reported that the federal government began the new budget year with a deficit in October that totaled $140.4 billion — down 20 percent from a year ago but still the third highest October shortfall on record. Even with the improvement, last month’s red ink set the stage for what is expected to be a third consecutive year of $1 trillion-plus deficits.
The Social Security proposal would change the inflation measurement used to calculate cost-of-living adjustments for program benefits, reducing annual increases. It will almost certainly draw opposition from advocates for seniors, who are already upset that there will be no increase for 2011, the second straight year without a raise.
The plan would also raise the regular Social Security retirement age to 68 in about 2050 and to 69 in 2075. The full retirement age for those retiring now is 66. For those born in 1960 or after, the full retirement age is now 67.
Better-off beneficiaries would receive smaller Social Security payments than those in lower earning brackets under the proposal.
The commission is supposed to report a deficit-cutting plan on Dec. 1, but panel members are unsure at best whether they’ll be able to agree on anything approaching Obama’s goal of cutting the deficit to about 3 percent of the size of the gross domestic product.
Building the needed support of 14 of its 18 members will be difficult. Cuts to Social Security and Medicare are making some liberals on the panel recoil. And conservative Republicans are having difficulty with the options suggested for raising taxes. The plan also calls for cuts in farm subsidies, foreign aid and the Pentagon’s budget.
“This is not a proposal I could support,” said panel member Rep. Jan Schakowsky, D-Ill. “On Medicare and Social Security in particular, there are proposals that I could not support.”
The plan released by Bowles is only a proposal put forth by him and Simpson. Members of the commission will resume debate on it later today and next week in a long-shot bid to reach a compromise.
The release of the proposal comes just a week after midterm elections that gave Republicans the House majority and increased their numbers in the Senate. During the campaign, neither political party talked of spending cuts of the magnitude proposed by Bowles, with Republicans simply proposing $100 million in cuts to domestic programs passed each year by Congress.
“It’s a very provocative proposal,” said a Republican panel member, Rep. Jeb Hensarling of Texas. “Some of it I like. Some of it disturbs me. And some of it I’ve got to study.”
But member Sen. Judd Gregg, R-N.H., called the proposal “an aggressive and comprehensive plan for getting federal spending, deficits and the debt under control. … This will not be the final proposal, but it is a significant step down the path of establishing fiscal responsibility.”
Other proposals by Bowles and Simpson include:
—Increasing the gas tax by 15 cents a gallon to fund transportation programs.
—A three-year freeze in the pay of most federal employees and a 10 percent cut in the federal work force.
—Eliminating all congressional pet projects, known as earmarks.
Their plan also calls for a major overhaul of both the individual income tax and the corporate tax systems with the idea of lowering overall tax rates, simplifying the Tax Code and broadening the taxpayer base.
For individuals and families, the proposal would eliminate a host of popular tax credits and deductions, including the child tax credit and the mortgage interest deduction. However, it would significantly reduce income tax rates. The top rate would drop from 35 percent to 23 percent.
The deduction that companies take for providing health insurance to their employees would be eliminated but the corporate income tax rate would be reduced from 35 percent to 26 percent, and the U.S. would stop taxing overseas profits of U.S.-based multinational corporations.
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.
Even with the dramatic proposals, the Bowles-Simpson plan would leave deficits of about $300 billion in 2015, the year by which Obama tasked the group with balancing the federal budget, except for interest payments on a national debt that now stands at $13.7 trillion. If the changes to Social Security are dropped, the deficit would be about $400 billion in 2015.
But the plan is an aggressive assault on the longer-term deficit crisis, which is fueled by spiraling costs for retirement programs.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Northwest wheat 
MrNatural on November 10 at 1:46 p.m.
Yeah Right……..Whatever.
greyhound2 on November 10 at 3:17 p.m.
While the military and social security are the untouchables, it is odd they would zero in on social security, a program which actually does something for the American people.
The military annual budget is about $750 billion base, with the wars in Iraq and Afganistan and its trillion dollar cost added on top of it. The $750 billion is as much as the corporate welfare check given to Wall Street to bail the banks out of their own gambling losses, only it is every year, not a one time shot.
Having a standing military is important, but what is not needed is an over-bloated military with bases in 46 countries. The nature of war has changed, no longer standing armies or fleets of warships, it has changed to terrorists throwing bombs in the back of a school bus, killing civilians and then running away. You don’t need a B-l bomber to kill a man on a horse. And, you don’t need to follow the example of the former Soviet Union and bankrupt yourself with your own military.
SpokaneLiberal on November 10 at 3:20 p.m.
The only problem I see is that by the time I retire I will be expected to work until I am 75 or 80.
But on a more realistic note we need to treat social security as a lock box. If we treat it as a general fund expenditure it will continue to be a problem. If we make it untouchable it wouldn’t be (although we would have to repay to it that which we already have borrowed).
The mortgage deduction should go.
So should the cap on income subject to social security withholding. I don’t even mind an additional gas tax or cuts and pay freezes in government.
misjustice on November 10 at 3:40 p.m.
Lift the cap on withholding. That would be simple.
What ever the final recommendations are, it is sure that there will be enough cuts/taxes to make everyone mad!
; )
hawken on November 10 at 5:07 p.m.
I like everything I read.
Everyone agrees we need to do something drastic…. very soon.
Everyone likes the proposed cuts,,,, as long as it doesn’t affect them.
One thing is certain. If we do nothing…. the whole system will collapse. It’s just a matter of time.
I’m reminded of John F. Kennedy…
“Ask not what your country can do for you. Ask what you can do for your country.”
I am also reminded of our founding fathers…. when they signed the Declaration of Independence.
“They signed and they pledged their lives, their fortunes, and their sacred honor.”
For over two centuries we Americans have benefited greatly from their sacrifice.
Too few, modern day Americans, have anything in common with our founders.
Selfishness, dependence upon, and demands of big government, from cradle to grave, is now the norm.
Self-sacrifice today is having to go without a big screen T.V.
God help us!
misjustice on November 10 at 5:29 p.m.
“Too few, modern day Americans, have anything in common with our founders.”
Yeah, not enough of us are rich white male lawyers or rich white male slave owners.
hawken on November 10 at 5:52 p.m.
Misjudgment makes my point…. a self-serving, far left liberal, self proclaimed, card carrying member of the ACLU.
For the rest of you, please read what happened to our Founding Fathers….
http://www.snopes.com/history/american/pricepaid.asp
Here’s the point, they were men of wealth at the time… and put it all on the line, including their lives, for the future sake of the nation…. From which we have greatly benefited as a nation for over 200 yrs.
We are at a similar crossroad, when the future of our nation is at stake…. this time economically.
Misjudgment would surely have been a “loyalist” if she had lived at that time…. no problem with taxation without representation… no problem with the tyranny of England…. no problem with the rule of a king.
spokanecommunistparty on November 10 at 6:01 p.m.
Raise the taxes temporarily until its paid off, don’t elect another Bush and the country will thrive. We did this during WW2 and it worked flawlessly.
Orange on November 10 at 6:10 p.m.
I want my social security money back.
Diana on November 10 at 6:15 p.m.
Misjudgment did not and could not ever prove the point of a teabagger hack (third rate).
hawken on November 10 at 6:29 p.m.
Hey Orange….
You should have considered that some 20+ yrs ago, if you’re that old.
I saw it coming in about 1982…. we were warned at the time…. and have been every year since.
What we are facing today should be no surprise to anyone.
Congress, Republican and Democrat alike, have been robbing the Social Security Trust Fund for decades! To pay for their pet projects.
Social Security is nothing more than a bunch of I.O.U.s which cannot be repaid by Congress.
It’s long past time to get used to the fact…
hawken on November 10 at 6:37 p.m.
Diana on November 10 at 6:15 p.m.
Misjudgment did not and could not ever prove the point of a teabagger hack (third rate).
I’m not sure that you are doing “Misjudgment” any favors in trying to defend her….
It’s actually, “Misjustice”….
“Misjudgment” is my label of her, based upon her “Misjudgment”….
She’s a big girl… I’m sure she can speak for herself…
Diana… I do appreciate the belly laugh!….. “Misjudgment.”
oneanddone on November 10 at 6:45 p.m.
While we still can, I favor the Venezuela approach. Tell China, sorry pal but we’re defaulting on every dime you gave us. (Instantly our debt goes down by a whole bunch.) What’s that chinaman? You won’t do business with us any more? Wow, I guess we’ll have to make our own stuff from now on. Throw us into that brier patch. We did damn fine for a lot of years being our own boss.
james_l on November 10 at 6:54 p.m.
“Too few, modern day Americans, have anything in common with our founders.”
In addition to being rich, white male slave owners, they did not believe women or people who didn’t own land should vote and that witches should be burned.
Now don’t please don’t misunderstand; I believe in the Constitution, but let’s be realistic about our past. They wrote the Constitution for themselves and it has taken more than 200 years to extend those basic rights to people who don’t own land, women, and people of color. We still haven’t extended those rights fully to all people.
By the way, I got a real kick out of the Snopes link above; particularly the conclusion “MIXTURE OF TRUE AND FALSE INFORMATION”.
jddavis on November 10 at 7:04 p.m.
I agree with Spokaneliberal…except for increased gas tax. ALL the money “borrowed” needs to be replaced and the govt needs to stop taking money out to fund other things.
hawken on November 10 at 7:04 p.m.
james_l
My point was about the self-sacrifice or our founders…. and in that sense….
Also, see my quote of Kennedy…. which you did not address…
Thus, my conclusion:
“Too few, modern day Americans, have anything in common with our founders.” ie; Self-sacrifice…. Or, John Kennedy for that matter.
I’m wondering if you might be suffering from dyslexia?
Or,,,, maybe, it’s just another, liberal left, Red Herring that you throw up regarding the Constitution.
hawken on November 10 at 7:07 p.m.
jddavis
There is no money to replace the money! That’s the whole point!
We are long past broke as a nation!
misjustice on November 10 at 7:09 p.m.
While it might make some people feel better to contemplate telling the “Chinaman” holding our notes to take a flying leap, it would likely cause a complete world economic collapse which would make the Bush Crash of 2008 seem like a hiccup. Probably not going to happen. Additionally, making over 1.3 BILLION more people more mad at us is not a good idea. You do the math.
Diana, you’re spot on, girl. Although in college I did a great job arguing the corporatist, er Republican’t, position in a mock Senate hearing relating to the concentration of media ownership; it’s easy to take that position, you disregard facts, stick to your “talking points”, shirk responsibility, and blame everything on Liberals. My professor, who knew of my political persuasion, was impressed with my transformation from a detail oriented critical thinker into a conservabot mindless zombie. I aced the class, of course!
BTW, thanks for having my back. Us gals have to stick together.
; )
Scoutster on November 10 at 7:29 p.m.
Congrats to these folks for at least provoking a discussion equal to the problem.
Gawd…we need to talk about this.
Alan Simpson has always been my favorite conservative. At least he’s authentic.
This is a good report, a GREAT report, in the context of having a serious discussion about this most important issue of our time.
hawken on November 10 at 7:37 p.m.
Scoutster
As far as I know, none of the people on the panel are up for re-election for the time being at least….
If I am in error on that point, please let me know.
If my understanding is correct, I would trust their judgment more than a politician that is or will be running for office.
Having said that, why should we not implement their recommendations?
Understanding that it will cost something to all political ideologies?
If we are holding out for the “perfect solution”…. we all know this… it will never come from the left or the right, because of our respective political ideologies.
Diana on November 10 at 7:39 p.m.
Hawken, yes…I know. It was meant as a joke for misunderstood. And I’m sure quite sure she got it.
At least you’re easily entertained.
james_l on November 10 at 7:41 p.m.
@hawken:
I frequent these blogs just so I can be slapped with labels by ideologues!
What was the “liberal left, Red Herring that you throw up”? Was it the part where I said I believe in the Constitution? Or was it my (and others) statement placing your jingoism in the accurate historical context.
I do believe in sacrifice when necessary to advance a common good. It just seems to me that everyone is being asked to sacrifice EXCEPT for certain wealthy and powerful people and corporations who do not share a common humanity with the rest of us.
hawken on November 10 at 7:46 p.m.
hawken on November 10 at 7:04 p.m.
James… please re-read my post above…. I have already answered your most recent question. How do I make it more clear?
misjustice on November 10 at 7:52 p.m.
Yes, Scout, we will have the discussion. But more than likely, we will do little but fiddle around the edges.
Lifting the cap on SS withholding would solve the problem of funding that program. Additionally, a gas tax would hammer home the cost of refusing to start moving our nation off it’s dependency on imported oil. Lessening our consumption of imported oil would also lessen our trade deficit.
The Bush tax cuts have to be allowed to sunset, as intended in the legislation. To continue to give tax cuts in a time of economic emergency may be politically popular but it is economically foolhardy.
Ending two foreign “wars” and reining in the Department of Defense MUST be done. If we are cutting butter we can ill afford bullets.
I highly doubt that any of this will be seriously considered, let alone accomplished. And in 2 years we will still be arguing about tax cuts for the top 2%….and so it goes.
; )
hawken on November 10 at 8:39 p.m.
The bi-partisan plan should be accepted….
“A good plan today is better than a perfect plan tomorrow.”
Let’s get to work on restoring the economic health of our nation.
eagleproducer on November 16 at 5:03 p.m.
hawken bleated: “We are long past broke as a nation!”
http://www.forbes.com/wealth/forbes-400
Some of us are broke. The nation isn’t.
Social security would be funded into perpetuity if the cap on earnings was removed.
It is a responsible solution that would affect less than 5% of earners. The wealthy are the only ones that can really afford to “suffer” austerity.
Instead of listening to the deficit hawks that will destroy our public institutions forever, let’s make this a class issue and refuse to allow the wealthy to get away with paying less (as a percentage of their income) in taxes than the average citizen. The tax rate in the 1950’s was more than twice what it was now for upper earners and that decade produced more millionaires than in any other in U.S. history.
Why is it that the majority in the U.S. continually supports policies that are against their best interest? How do they simultaneously believe they live in the best place on Earth while holding in contempt most of our institutions?
eagleproducer on November 16 at 5:16 p.m.
It’s time to dismantle the military industrial complex and move to a sustainable peace time economy.
The focus of our efforts as a nation should be in the direction of energy independence and local sustainability.
We should have waste water treatment facilities in every neighborhood that grow vegetables and raise fish while naturally cleansing waste water. This technology exists along with many others, that would provide instant employment, reduce dependence upon foreign energy sources and provide locally produced food stocks.
Bring the boys and girls back home and let’s show the world once again our leadership in advancing human rights and being the greatest force of improving humanity that has ever existed.
My sleeves have been rolled up for a long time. How about you?
eagleproducer on November 16 at 5:20 p.m.
I propose everyone who has wealth in excess of 100 million be subject to a one time 50% tax of their net worth.
Are you telling me Bloomberg would have a hard time getting by with only 9 billion?
Or Buffet with only 25 billion?
Or the Koch brothers with only 20 billion?
Or the Waltons with only 50 billion?
Please. Instant fix, China paid off, surplus to invest in our future.
But no. Most of you will continue to vote rich and live poor. Poor in comparison to them.
eagleproducer on November 16 at 5:24 p.m.
I bet misjustice, had she lived during the American Revolution, would have eschewed such simplistic pigeon holing and approached reality with her critical faculties.
Try it some time, Doc.
Still waiting for your gay bashing dissertation. I really need some humor.