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When It Comes To Fiscal Responsibility The Democrats Are The Party of “No”

10 Nov

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.

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4 responses to “When It Comes To Fiscal Responsibility The Democrats Are The Party of “No”

  1. P. Henry Saddleburr

    November 10, 2010 at 11:33 pm

    I am not well read on this new proposal, but my concern is this. Eliminating the mortgage deduction will kill the already struggling real estate market. And who’s to say that once the deduction is eliminated then the tax rate won’t rise? Deduction gone forever. Taxes? They’ll decide.

    This deserves careful consideration. Not saying that it’s good or bad. There are elements worth considering. They have presented bold ideas, as those appointed to commissions are enabled to do. They don’t have to run for election, but neither are they accountable for success or failure.

    9/11 Commission, anyone?

    I think that Commissions are a device employed by cowardly politicians to provide them cover. ‘I was only following the recommendations of the esteemed BIPARTISAN Commission’.

    What I didn’t see much of was CUT. It is not enough to freeze Federal payrolls, they must be reduced. Let’s use the Democrats’ language on this. Cut the Rich. And let’s make it progressive and see how bureaucrats like it. Highest earners get a 20% Cut in pay. Graduate it throughout the payscales and give the bottom layer a 5% increase. How do you like that medicine?

    I also didn’t see ELIMINATION of Spending. We need to get out of the PBS, NPR, National Endowment for the Arts, National Endowment for the Humanities, Foreign Aid for unfriendly nations and the funding of the UN business. We also need to stop running to the aid of enemies that are hit by natural disasters.
    Sorry. We just can’t afford it any longer.

    I guess this should have been a blog post on its own. I apologize.

    This will be an interesting and thought provoking conversation.

     
    • Martin M. McMartin

      November 11, 2010 at 6:18 am

      I am in favor of a lower and flatter income tax and the elimination of all deductions(excluding those for taxes paid and charitable contributions). I have always been against using the tax code in an attempt to manipulate behavior. As for the elimination of the mortgage interest deduction killing the housing market I would remind you that the credit card business has grown after that deduction was eliminated. I think this move will put some downward pressure on home values but if we maintain the deduction for real estate taxes the industry will survive.
      The “Freeze” in Federal payrolls must be accompanied by a “Freeze” on hiring as well. There are a large number of federal workers reavhing retirement age and we can quickly reduce the federal workforce through attrition.

       
  2. P. Henry Saddleburr

    November 10, 2010 at 10:56 pm

    But your observation about Democrats being unwilling to consider restrictions on their pet entitilements is absolutely correct. I left that out of my previous comment only because I was raging about what WASN’T in the report.

     
  3. Saddlesore

    November 11, 2010 at 10:53 am

    I took a few minutes and looked at the 50 page powerpoint, which has been released. Here is my overriding concern.

    Our fiscal problems essentially stem from the fact that we have too much socialism in this country. Social security, Medicare, Medicaid, the EITC, etc. are all various forms of socialism. In order to really attack the fiscal problems, we need to identify the cause, which is socialism. My fear is that the proposal does not go to the root cause of our problems. Yes, there were some entitlement reform ideas in there, but the basic thrust of the proposal is to prop up a failing system.

    Ronald Reagan tried years ago to get $2 of cuts to $1 of tax increases from Tip O’Neill. He got the tax increases, but not the cuts. With O in the White House we will end up with worse.

     

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