Presidential Commiions Debt Reduction Proposal

[danefan]

A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would cut Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.

The co-chairmen of the panel appointed by President Barack Obama suggested reducing Social Security spending by raising the retirement age to 68 in about 2050 and 69 in about 2075. The plan also would slow the rate at which benefits grow. The savings would come between 2012 and 2020.

......

None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent.

Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said.

Any politicians out there have the balls to push something like this through? I doubt it.

[89Hen]

eliminate tax breaks including the mortgage-interest deduction.

Any politicians out there have the balls to push something like this through? I doubt it.

This is brought up every single year. If anyone thought the housing crash was bad, just pass that and watch it crumble.

[Rob Iola]

At some point the Social Security retirement age will have to be raised, so if the proposal scope is scaled back to that finding Congress would have political cover to pass it now.

This isn't too different than BRAC was, and that actually was fairly effective...

[YoUDeeMan]

This isn't too different than BRAC was, and that actually was fairly effective...

The correct spelling is Barack, and he has been very ineffective.

[mebison]

The people on the committee have already said that its totally unrealistic and it has no chance of seeing a congressional debate. Which makes you wonder why they bothered putting it out there at all.

Seems like reasonable things to look at to me. Despite that I have benefited from mortage-income-tax deduction, I think there is too much emphasis on buying a home here, and a lot of that stems from "the tax breaks will make it worth it!".

[GannonFan]

Nothing in the report can't be done. I'm alright with getting rid of the home interest deduction assuming taxes in other areas come down to compensate. There's no doubt that a simpler tax code would be highly effective. And the Social Security stuff isn't shocking either - most people are working later anyway so it wouldn't be as big of a burden as it's been made out to be. Gotta start doing something along these lines.

[89Hen]

I'm alright with getting rid of the home interest deduction assuming taxes in other areas come down to compensate.

If you lowered taxes in other areas to compensate, you'd be reducing the overall tax revenue by a TON because of all the non-homeowners who would see a net reduction from what they are paying now. Toothpaste is out of the tube on this one.

[GannonFan]

I'm alright with getting rid of the home interest deduction assuming taxes in other areas come down to compensate.

If you lowered taxes in other areas to compensate, you'd be reducing the overall tax revenue by a TON because of all the non-homeowners who would see a net reduction from what they are paying now. Toothpaste is out of the tube on this one.

At some point you have to put the toothpaste back in. Like with toothpaste, it will be messy, but there has to be a way to transition it over time until you ultimately get there. Can't be any more complicated than it's been to get where we are today.

[Skjellyfetti]

I don't see the three year freeze on military compensation going over too well.

[Ivytalk]

Some good ideas, but the devil is in the details, and that's where the lobbyists come in.

[89Hen]

If you lowered taxes in other areas to compensate, you'd be reducing the overall tax revenue by a TON because of all the non-homeowners who would see a net reduction from what they are paying now. Toothpaste is out of the tube on this one.

At some point you have to put the toothpaste back in. Like with toothpaste, it will be messy, but there has to be a way to transition it over time until you ultimately get there. Can't be any more complicated than it's been to get where we are today.

Why is it necessary? If you take it away, housing prices would immediately drop across the entire country. NOT a good thing when you're trying to grow the economy.

[GannonFan]

At some point you have to put the toothpaste back in. Like with toothpaste, it will be messy, but there has to be a way to transition it over time until you ultimately get there. Can't be any more complicated than it's been to get where we are today.

Why is it necessary? If you take it away, housing prices would immediately drop across the entire country. NOT a good thing when you're trying to grow the economy.

It's only necessary in the sense that it takes out an artificial component of a home's value. I agree that it would be highly disruptive and would bring down values, hence the need to phase it in, and maybe over an extended amount of time (i.e. decade). But in the long run, it would be better to simplify this than keep it distorted by propping up values based on tax credits.

[Appaholic]

A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would cut Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.

The co-chairmen of the panel appointed by President Barack Obama suggested reducing Social Security spending by raising the retirement age to 68 in about 2050 and 69 in about 2075. The plan also would slow the rate at which benefits grow. The savings would come between 2012 and 2020.

......

None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent.

Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said.

Any politicians out there have the balls to push something like this through? I doubt it.

Watched some of the responses on Morning Joe....

“The chairmen of the Deficit Commission just told working Americans to ‘Drop Dead,’” said Richard Trumka, president of the AFL-CIO, referring to proposed changes in how Social Security is administered. “Some people are saying this is plan is just a ‘starting point.’ Let me be clear, it is not.”

House Speaker Nancy Pelosi, California Democrat, called the proposal “simply unacceptable.”

http://dailycaller.com/2010/11/10/debt- ... -response/

The Republican response was basically they are all up for debate. Careful Dems, now you have the Republicans sounding reasonable & rational.....

[Appaholic]

Why is it necessary? If you take it away, housing prices would immediately drop across the entire country. NOT a good thing when you're trying to grow the economy.

It's only necessary in the sense that it takes out an artificial component of a home's value. I agree that it would be highly disruptive and would bring down values, hence the need to phase it in, and maybe over an extended amount of time (i.e. decade). But in the long run, it would be better to simplify this than keep it distorted by propping up values based on tax credits.

Agree, but the only way that happens is, like you said, by simplifying the tax code drastically ie; FairTax...which no one has the political cajones to touch I'm afraid....

[Col Hogan]

I don't see the three year freeze on military compensation going over too well.

Taken singularly I agree...but as part of the large package that impacts everyone, I really don't see an issue with that idea...

[Appaholic]

I don't see the three year freeze on military compensation going over too well.

Taken singularly I agree...but as part of the large package that impacts everyone, I really don't see an issue with that idea...

Agree. But from the responses from the left, everyone is aleady lining up behind their own special interest....sounds like we need to vote some more a-holes out of office to get any reasonable reduction plans debated and acted upon....

[89Hen]

But in the long run, it would be better to simplify this than keep it distorted by propping up values based on tax credits.

Why?

[Col Hogan]

Taken singularly I agree...but as part of the large package that impacts everyone, I really don't see an issue with that idea...

Agree. But from the responses from the left, everyone is aleady lining up behind their own special interest....sounds like we need to vote some more a-holes out of office to get any reasonable reduction plans debated and acted upon....

Yea, I love how ky pulls that one item out...maybe trying to get some support for killing the whole idea from military supporters...a little attempt to "divide and conquer", I think...

Well, we understand the whole picture...everyone is going to have to give some to fix this...and as long as supporters of really fixing the spending mess the current and recent past administrations have gotten us into stick together...we can fix this country for the next generations...

[Appaholic]

But in the long run, it would be better to simplify this than keep it distorted by propping up values based on tax credits.

Why?

Why keep prices artificially high through government subsidies? Or am I being too simplistic?

[OL FU]

But in the long run, it would be better to simplify this than keep it distorted by propping up values based on tax credits.

Why?

Because the tax code has been used for way to long to incentivize way too many behaviors. Have a kid, get a deduction and a credit. Buy a house, get a deduction. By a car, get a credit. You are absolutely right that the removal of the interest deduction would be disasterous right now. But that doesn't mean it should not be done slowly over the long term.

Question, If the purpose is to promote home ownership and if that is a good reason, then why not start with eliminating the deduction for second homes?

[kalm]

How about we start by not wasting money on stupid commissions who only recommend?

Cut spending, raise the top marginal tax rate, close corporate loopholes, protect domestic manufacturing like every other country does, and place heavy tariffs on companies that leave or outsource but still want our markets.

[89Hen]

Why?

Why keep prices artificially high through government subsidies? Or am I being too simplistic?

GF said the personal loss to the housing incentive would be made up elsewhere, so the net effect is zero. I'm asking why it is necessary to eliminate this tax break if you're just going to give in somewhere else.

[kalm]

Oh, and I almost forgot. Limit the presidency and congress to one term so they can have the guts to make these type of decisions without the fear of pissing off voters

[Appaholic]

Why keep prices artificially high through government subsidies? Or am I being too simplistic?

GF said the personal loss to the housing incentive would be made up elsewhere, so the net effect is zero. I'm asking why it is necessary to eliminate this tax break if you're just going to give in somewhere else.

Agree. That's why I support simplifying the code to remove the plethora of taxes that make it necessary to give a plethroa of tax breaks instead of just playing a shell game with the existing tax code which is used to incentivize behavior.

[Chizzang]

Some good ideas, but the devil is in the details, and that's where the lobbyists come in.

Funny I was skimming along enjoying the thread all the while thinking the same thing...

Any warm hearted honest political endeavor must eventually be exposed to the "Money Team" the lobbyists - and by the time they're done sh!tting all over it - it will hardly resemble its original version and nobody will want to touch it because it stinks so bad...

See Healthcare Lobby