Former Senators Simpson and Bowles of the National Commission on Fiscal Responsibility and Reform proposed a plan to reduce the deficit through spending cuts and tax increases and the response not only helps us to understand how we got to this point but clearly indicates the steep hill we must overcome if we are to reign in our fiscal irresponsibility.
The co-chairs proposal is bold and it’s outside of the box. All income-tax deductions would be eliminated while income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent. Currently there are six tax levels ranging from 10 percent to 35 percent. The corporate income-tax rate would be cut to 26 percent from 35 percent.
Overall I think the plan has some merits, we are in a deep hole and climbing out is going to require sacrifice and discomfort. The Social Security recommendations are curious and telling, while I would recommend a different solution, the idea of having to eliminate C.O.L. increases and over time increase the retirement ages, indicates how infirmed this program is.
I view the plan as a balanced mix of spending cuts and tax increases and what struck me most was while the reaction from Democrats was overwhelmingly negative, most Republicans looked at it as a reasonable starting point. Nancy Pelosi looked like she was writhing in pain and said,“This proposal is simply unacceptable, Any final proposal from the Commission should do what is right for our children and grandchildren’s economic security as well as for our nation’s fiscal security, and it must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare. And it must strengthen America’s middle class families — under siege for the last decade, and unable to withstand further encroachment on their economic security.”
Not to be outdone, far left-wing Illinois Representative Jan Schakowsky and panel member stated “This is not a proposal I could support,” panel member. “On Medicare and Social Security in particular, there are proposals that I could not support.”
It wasn’t just Democrat legislators who rejected the proposals, their allies also spoke out.
AFL-CIO President Richard Trumka said the panel chairmen “just told working Americans to ‘drop dead.’” In an e-mailed statement, Trumka said, “The very people who want to slash Social Security and Medicare spent this week clamoring for more unpaid Bush tax cuts for millionaires.”
John Rother, executive vice president for policy at the senior citizens’ group AARP, said his group would oppose the plan because it would be “dramatically lowering benefits over time” in Social Security and Medicare.
Why the disparate reaction? I think the plan hits the liberal democrat right in their sweet spot. They thrive on pandering with entitlements and controlling behavior with the tax code.
I am sure this plan is not perfect and as I learn more about it I may find some elements need to be changed but it is striking that the Republicans of late have been the party of “No” when spending and entitlements were proposed and the Democrats have loudly proclaimed they are the party of “No” when fiscal responsibility is proposed.