Erskine Bowles and Alan Simpson, the chairs of the catfood commission, have issued their draft recommendations, and they are as draconian--for the middle class--as we've been expecting.
The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.
But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books.
The proposed simplification of the tax code would repeal or modify a number of popular tax breaks — including the deductibility of mortgage interest payments — so that income tax rates could be reduced across the board. Under the plan, individual income tax rates would decline to as low as 8 percent on the lowest income bracket (now 10 percent) and to 23 percent on the highest bracket (now 35 percent). The corporate tax rate, now 35 percent, would also be reduced, to as low as 26 percent.
So the rich get lower taxes, you lose your mortgage deduction, get a cut in Social Security and a raise in the retirement age. Yeah, that's about right for the deficit peacocks. Among other recommendations:
- Index the retirement age to longevity -- i.e., increase the retirement age to qualify for Social Security -- to age 69 by 2075.
- Index Social Security yearly increases to inflation rather than wages.
- Freeze federal worker wage increases through 2014; eliminate 200,000 federal jobs by 2020; and eliminate 250,000 federal non-defense contractor jobs by 2015
- Establish co-pays in the VA medical system and change the co-pays and deductibles for military retirees that remain in that system.
- Eliminate NASA funding for commercial space flight.
- Require the Smithsonian museums to start charging entrance fees and raise fees at the national parks.
- Eliminate funding to the Corporation for Public Broadcasting -- which many conservatives suggested in the wake of the firing of former NPR contributor Juan Williams.
- Reduce farm subsidies by $3 billion per year.
This is not the full recommendation of the commission, which requires 14 of the 18 members to sign off--it's the proposal the chairs prefer, proposals that should be DOA among Democrats--cutting Social Security, cutting veterans benefits, further eroding the middle class by punishing federal workers while actually cutting taxes even further for the wealthiest Americans and big corporations is untenable.
You can read the draft plan here.
Update: Stressing that this is not the final commission plan, two Dems on the panel react:
“This is not a package that I could support,” Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission. She said any package able to win 14 votes on the panel would have to look “very different” from the options being discussed.
Senator Dick Durbin, an Illinois Democrat, called the plan a “starting point for the conversation.”
“We’re not going to have an up-or-down vote on this,” said Durbin. “There are proposals in there that are painful. I told them I said there are things in here which inspire me and other things which I hate like the devil hates holy water. I’m not going to vote for those things.”
Bowles and Simpson could be trying to muscle through their preferences, or they could be laying groundwork for a "compromise," less draconian, set of proposals from the full commission by making this look awful so that whatever the larger group comes up with is by comparison acceptable. Who knows for sure. But if there are massive tax cuts for the wealthy and pain for the rest of us in the final proposal, it should be DOA.