Wednesday, November 17, 2010

The Deficit Commission

We all know, perhaps all too well thanks to the screaming Tea Party, that the government is spending a lot of money recently.  "Too much spending."  "Out of Control spending."  We're certain that you've heard these mantras before.  Well the fact of the matter is, the US Government is currently operating at an annual budget deficit of about a Trillion bucks/year, and the overall national debt is approximately $13 Trillion, give or take a few dollars.  Despite what the Tea Party would have us believe, the history of our deficit problems did not begin on January 20, 2009.  Rather, the current problems can most notably be traced back to President Ronald Reagan in 1980 who simultaneously increased defense spending while giving massive tax cuts to the wealthy in what came to be known as "trickle-down economics" (help out the rich and it will "trickle-down" to the poor).  Long story short, after Reagan left office, he took the total national debt from about $900 Billion when he took office (if you can believe it was ever that low) to about $3 Trillion, literally tripling the national debt and setting it on a course that it has never quite fully recovered from still to this day. (see graph below)

The national debt actually fell during Clinton's presidency, but Bush 43 took the debt from $5.6 Trillion in 2000 to $12.3 Trillion in 2008.  In other words, Bush doubled the national debt during his presidency.  It was upon this backdrop that Obama became President.

Given this growing problem, President Obama formed a group that has been getting a lot of controversial press lately:  The Deficit Commission.

The Deficit Commission is charged with the unenviable task of reducing the national debt by $4 Trillion by the year 2020.  The Commission is made up of 18 people, requiring 14 out of the 18 to agree on any measure before it goes to Congress, and it is co-chaired by Democrat and former Chief of Staff to Bill Clinton, Erskine Bowles, and Republican Alan Simpson, the former senator from Wyoming. This commission put together a proposal that has everybody on the Left and Right talking.  You can read it HERE; the gist of it is, if we're seriously going to cut the national debt then we've got to lose the political talking points and actually start CUTTING some shit out.

From the NY Times:

TAXES The proposal includes three options for tax reform, two of which would simplify the code by reducing income tax rates while modifying or repealing many tax deductions and other tax breaks. The third calls on Congress to undertake tax reform, while putting in place automatic tax increases if it fails to act by 2013...
THE MILITARY The Pentagon, which accounts for half of all discretionary spending, got virtually all it wanted after 9/11. Since the recession, Defense Secretary Robert Gates has cut back several dozen unneeded weapons programs for a long-term savings of $330 billion. He has called for $100 billion in administrative cuts and efficiencies over five years. But he would plow the savings into troops and weapons modernization, maintaining modest growth in overall spending. The new proposal would go far beyond that, anticipating $100 billion in military budget cuts in 2015 alone — and would put the savings into deficit reduction...
SOCIAL SECURITY To ensure the system’s solvency over 75 years, the proposal would reduce benefits to most future retirees. It would also subject higher levels of income to the payroll taxes that support the program, while building in safeguards for both low-income and long-lived beneficiaries.
HEALTH CARE The chairmen would go beyond the new health care reform law by strengthening some of the most important cost-cutting provisions that were watered down in the struggle to pass the legislation. It would strengthen a Medicare payment advisory board and cap tax exclusions for employer-sponsored plans at a lower level than the law does. The chairmen would spread the pain in both ideological directions. They propose caps on malpractice awards that can drive up costs, which is anathema to Democratic-leaning trial lawyers, and, if costs rise faster than targets, they back the introduction of a public plan on the new insurance exchanges, which is anathema to Republicans. 

What do you make of the Deficit Commission and its proposals?
Do they get it right on the big ticket items?
What is the political likelihood that the Commission's suggestions will pass in Congress?
What would you cut to reduce our national debt?
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