Catfood Commission's Initial Recs: Cut Corporate Taxes, Raise SS Retirement Age, Means Testing

Hannah Bell

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Wed Nov-10-10 03:58 PM
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Catfood Commission's Initial Recs: Cut Corporate Taxes, Raise SS Retirement Age, Means Testing

Edited on Wed Nov-10-10 03:59 PM by Hannah Bell

UPDATE - 1:25PM ET: The draft put out by the commission chairs has been released, coming in at 50 pages. The overarching goal, Simpson and Bowles write, is to achieve "nearly $4 trillion in deficit reduction through 2020" while reducing "the deficit to 2.2% of GDP by 2015."

How they get there is going to be a matter of contention as other commission members have already stressed their displeasure with the suggestions. But here are a few of the more noteworthy suggestions.

�Roll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015;

�Fully offset the cost of the "Doc Fix" by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth;

�Reduce farm subsidies by3 billion per year by reducing direct payments and other subsidies;

�Achieve100 billion in Illustrative Defense Cuts;

�Index retirement age for Social security to increases in longevity. "This option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075." There will be a "hardship exemption" for those unable to work beyond 62;

�Give retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options;

�Reduce corporate tax rate to 26% and permanently extend the research credit;

�Gradually increase gas tax to fund transportation spending.

UPDATE - 1:45PM ET: A more detailed list of discretionary spending cuts proposed by Simpson and Bowles has been released. Below are a few of the more notable bites at the apple:

�Reduce Congressional & White House budgets by 15 percent;

�Freeze federal salaries, bonuses, and other compensation at non-defense agencies for three hears;

�Cap the number of federal political appointments at 2,000;

�Eliminate the Office of Safe & Drug Free Schools;

�Eliminate all earmarks.;

�Reduce unnecessary printing costs;

�Reduce funding to the Smithsonian and the National Park Service and allow the programs to offset the reduction through fees;

�Cut funding for the Corporation for Public Broadcasting.

The most direct assault on Social Security, however, may not be the increase of the retirement age, but rather an attempt to tilt the program toward a welfare model and away from the current, universal insurance model that has made it popular and enduring despite 75 years of attacks. The co-chairs propose to "increase progressivity of benefit formula by creating a new bendpoint at the 50th percentile." Such a move would require means testing. In other words, the government would determine benefits based on a beneficiary's assets and other sources of income. Currently, beneficiaries are paid benefits based on their contribution over their working life. Replacing the social insurance model with a welfare model would erode support, encourage fraud and ultimately undermine the program.

http://www.huffingtonpost.com/2010/11/10/debt-commission-report-social-security-medicare-_n_781606.html