The Deficit Commission Co-Chairs’ Draft Proposal

After a quick read and not much time for reflection, my random thoughts.

The Good:

Bring spending down to 21% of GDP; cap revenue at 21% of GDP.  I would like to see if we can go lower, but 22% is not too not bad.

General theme of trying to simplify the tax code, broaden the tax base, and lower rates.

Change to biennial budgeting.  I think that would add some additional stability and accountability for spending.

Eliminate all earmarks.

Eliminate 10% of the federal workforce.

Individual income tax rates of 8%, 14%, 23%; corporate  rate of 26% (subject to adjustment to account for “tax expenditures)

Eliminate all “tax expenditures” (deductions and credits), then add back any desired ones and change tax rates to achieve net zero effect.  This would at least make people think about and review all the various programs that try to move money around and encourage/discourage behavior through credits and deductions.

Dedicate gas tax to transportation needs.

Fix the consumer price index so it no longer overstates inflation.

Calls for tort reform.

Reduce farm subsidies.

Reform federal and military pensions.

Reduce Universal Service Fund.  The USF is a telecommunications slush fund.

Index retirement age to increases in longevity (with a hardship exemption).

The Bad:

Start spending cuts gradually and in 2012.  No need to wait.  We should at least roll back immediately to 2008 or earlier spending levels.

Federal pay freezes, not cuts.  Federal pay and benefits are far higher than in the private sector and need to be brought down.

Federal workforce reductions are very gradual.  The headcount needs to go to pre-Obama levels quickly.

Raise the standard deduction to $30,000.  Everyone with an income should pay some amount, even if a very small amount, to support the federal government.

Raise the gas tax $0.15 and allow it to be used for boondoggles like high speed rail.

Treat dividends and capital gains as ordinary income.  We need to keep investment flowing, so capital gains rates should be cut, not increased.

Would federalize tort reform.  This is not a federal issue and it should be done by the states.  If they refuse and it costs their citizens more, so be it.

Other:

“Lead by example: Responsibility begins at the top.”  Then we will have to wait until at least January 20, 2013.

I am sure that as I read through it again and hear from other commenters that some things I have labeled as bad could change to good and vice-versa.  There are also a lot of single-sentence suggestions (“Direct SSA to design a way to provide for the early retirement needs of workers in physical labor jobs”) that are sure to be undone by the details.  But I have to say that it is an honest attempt at a difficult issue.

UPDATE:  The Really Bad.  The report embraces Obamacare.  I kind of missed that.

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Published in: on November 10, 2010 at 3:15 pm  Comments (1)  

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  1. […] raising taxes while allowing spending to continue unchecked.  But it surprised me.  As I wrote previously, I don’t agree with all of the proposals, but at least the commission made an honest […]


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