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Deficit Panel Targets Social Security and Taxes
WASHINGTON - The co-chairmen of a presidential commission to cut the budget deficit on Wednesday proposed reducing benefits and raising the U.S. pension retirement age among an array of tax and spending changes.
The co-chairmen of a presidential commission to cut the budget deficit on Wednesday proposed reducing benefits and raising the U.S. pension retirement age among an array of tax and spending changes. (AP Photo/Bradley C Bower)
Taking aim at some of Washington's most politically explosive fiscal issues, the draft proposals were portrayed as achieving $4 trillion in deficit reduction through 2020, but they got a mixed reception from other commission members.
With a final report due from the panel on December 1, Democratic Representative Jan Schakowsky, a commission member, told reporters: "It's not a proposal I could support."
Republican Representative Paul Ryan, also a commission member, said: "There are things in here I like, things I don't like. This is a serious, impressive effort. It's a good start ... We've got a long way to go."
Co-chairmen Erskine Bowles and Alan Simpson also called for changes to the mortgage interest tax deduction, cuts in defense spending, and a reduced base rate for corporate taxes, according to the draft proposal distributed to reporters.
The proposal suggests raising the Social Security retirement age to 68 by 2050 and 69 by 2075 with a "hardship exception" for certain occupations where that would be unrealistic, the draft said.
Bowles, a Democrat, was chief of staff for President Bill Clinton. Simpson is a retired Republican senator. The two were named to head the commission this year by President Barack Obama in a move meant to show the White House is serious about tackling the deficit.
The two also proposed phasing in budget cuts beginning in fiscal 2012 and bringing down federal spending eventually to 21 percent of gross domestic product.
Fourteen of the panel's 18 members are supposed to approve a final report for Obama containing recommendations to balance the budget. But analysts expect it to be difficult to reach that kind of consensus and predict the commission may end up issuing a less conclusive report.
DEFICIT REDUCTION TARGETS
The commission's proposal came as a separate, private-sector panel called for a shake-up of the budget process that would set clear targets for reducing red ink and impose spending cuts and tax increases if targets were missed.
The recommendation by the Peterson-Pew Commission on Budget Reform, a balanced-budget advocacy group that has no official government role, recommended that the president and Congress be required to respect deficit-reduction targets and that serious consequences be levied for falling short.
If a budget enacted by Congress missed a target, the president could propose cuts to bring it in line, the Peterson-Pew Commission recommended.
"If the target were still missed, spending reductions and tax increases would be imposed through automatic trigger mechanisms," the Peterson-Pew Commission said.
The report from Peterson-Pew -- one of a handful of panels studying the deficit problem -- comes days after an election that swept Republicans to power in the House of Representatives partly on a wave of voter outrage over the $1.3 trillion deficit and the national debt of more than $13.6 trillion.
The presidential commission has held five public meetings this year. Closed-door meetings have occurred regularly.
Democrats are resisting spending cuts, while Republicans, emboldened by the election results, are likely to keep refusing to consider tax hikes, according to commission members.
Most budget analysts agree that some mix of both is needed to tackle the huge problem, but aides said it seemed unlikely that the presidential commission would reach a consensus by the time their final report is due on December 1.
(Additional reporting by Andy Sullivan, Kevin Drawbaugh and Kim Dixon; Editing by James Dalgleish)
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98 Comments so far
Show AllWhere is the progressive's tax on the robber barons?
What we really need for true change.
http://market-ticker.org/akcs-www?post=171835
There is something like 20 million Americans that are aged between 65 and 74.
If one assumes that there more aged 65 then any age above that this means over 2 million Americans are 65. The number reaching the age of 65 each year will increase for the next while.
In order to keep working these Americans will take up around 2 million Job Vacancies per year.
The US economy must currently create 100,000 Jobs per month in order to keep pace with the population entering the labor force.
Raising the retirement age to 67 and then to 69 means for the forseeable future this number will have to increase to around 200,000 per month.
Where are all these "new Jobs" to come from?
What are the "net costs" of an Addtional 100,000 people per Month unable to find work in the way of increased food stamp payments need to use medicaid and welfare services and increased rates of crime?
You can bet that nobody in DC is performing the his type of analysis, GwNorth.
In DC they perform Machiavellian analysis whereby they make the data justify their preordained conclusions. DC may have started out as an acronym for District of Columbia. Today DC is an acronym for Delusion Central.
Please add the following to your analysis, GwNorth:
1)A baseline of only 10% to 15% of US college graduates getting jobs in their field of study during the past three years, partly due to so many boomers delaying or cancelling retirement.
2)Due to job losses, pension gutting and Obamacare medical cost inflation, 80% of US retirees now and in the future will depend on Social Security for a greater percentage of their retirement income than they anticipated three years ago, which will result in a defacto raising of the average US retirement age, irrespective of what changes are made to Social Security. Increasing Social Security benefits for all recipients will be the only way to resolve this issue.
"Where are all these "new Jobs" to come from?"
If the Cat food commission can dream it up, you too can dream up these imaginary jobs!
Why do you think the students in France took to the streets to protest Sarkozy's plan to increase the retirement age to 62? They understand: for every older person who stays in his/her job, that's one job fewer available for new grads.
I've heard that economics courses are common in European high schools. (Want to guess why they aren't common here?)
gnken
yes they took to the streets but Sarkozy still signed the bill into law. In this country if we protest they will arrest us, and we will lose our jobs. So most will go along with it and sell themselves down the river.
I lost a good career and a different good job because I stood up. So what you say is true. It's not easy nor can you depend upon any support from others. Your friends fall away, your family endures great stress, you are forced to sell your most treasured items to survive, you build down your life style significantly, and life becomes a struggle that you often lose. Depression effects your ability to function efficiently. You increasingly do not have the things necessary to live in a normal way. Your family and friends lose respect for you as you increasingly become a statistic. The cost of freedom is high but the alternative is slavery.
Shhhh...don't rain on their parade.
And this "Plan" saves all of 200 billion dollars. It's another embarassment for this administration.
I sometimes wonder if you are required to leave your brain at the city limits of Washington D.C.
You cannot begin to reduce spending if you do not address the military budget first, the occupations second and get a real Health Care plan in place of the Obamacare charade.
And that assumes you have recalled the unspent TARP money and the unspent Stimulus money.
Want to boot the economy? Double the unearned income credit for everbody with that TARP money instead.
Good post. Of course we know that the real purpose of the deficit commission is to undo the remaining New Deal programs; to end any public money being used for the public good.
A quick review of history reminds us that Obama met with and promised to a group of right-wing critics to slash Social Security even before he took the oath of office.
When Obama 's original Senate Deficit commission didn't materialize he quickly formulated his 'Presidential Commission'.
I hate to be conspiratorial but it appears to this observer that these plans have been warming for many years simply awaiting a spineless and malleable Democrat and the perfect moment to put them in motion. Kind of like the Patriot Act's entrance stage left almost immediately following 9/11. Co-inky-dink I'm sure.
Reuters is kind enough to donate four paragraphs to billionaire madman Pete Peterson's crusade of the merciless which will achieve his lifelong dream of grandparents everywhere living in the park.
The Social Security fund, or the treasury bills that are supposed to be parked there, will be needed to fund the coming war with Iran, Yemen and anywhere else where millions of people live lavishly on $2 a day and unknowingly sit on top of our oil.
This is the end game folks. The Treasury is dry. Bernanke's fingers are tired from typing so many zeros onto the balance sheet of the Fed. The dollar is being destroyed in an act of financial terrorism and desperation.
Serf City USA, here we come!
At the rate parks are closing or being privatized there won't be any parks for grandparents to live in. The lucky ones will live under railroad bridges where they might find a few lumps of coal falling off trains to keep them warm.
Coal? Aren't we supposed to be running out of that too?
When Warren Buffet recently purchased 20% of North America's railroad capacity he told the world that BNSF (his railroad) would be hauling coal for the next century, either to North American power plants or to docks where it will be loaded on ships hauling it to power plants in other parts of the world.
One neat way to get rid of Social Security is to bump up the retirement age to 80.
Meanwhile, enormous numbers of people in their 50s are finding that no one will hire them. First, they're bigger healthcare monetary risks. Also, they might die and leave a hole in the business. Second, they're not at all as stupid as the young slaves.
Yup I am in my 50s and the only job I could get in almost 2 years worth of looking was a Census job. I also had one potential employer basically tell me to my face your second reason for not employing older folks.
I understand, exactly, what you're saying. In an interview, as soon as a person demonstrates an ability to think and make decisions through independent thought, the tone of the interview changes. One manager told me, blatantly, that I should apply elsewhere. This fact really shouldn't be surprising, though. In 1956, William H. Whyte reported in his landmark book, The Organization Man, that "personality tests" were developed and put in place in order to weed out independent thinkers from the corporate system.
Totally agree, as I'm in essentially in the same situation and have had to face the fact that, realistically, there's no hope of ever finding livable-wage work until I can 'retire'--or die.
After the recent death of my mother, I'm also overwhelmed at having to find housing for my mentally disabled brother. The very same diseased society that will trash elders is, of course, slashing and burning help for him and the most vulnerable among us--all while the real parasites are gorging on the host at an alarming rate.
I must say, Obama is getting the job done for the oligarchs at a much faster pace than I ever could have imagined.
How about raising taxes on those with "ability to pay", the filthy rich ( most of whom achieved their status through various forms of theft from the rest of us ).
The Democrats keep proposing to keep Bush tax cuts for those earning less than a quarter mill (plus or minus), when they should be proposing to dump ALL of the Bush tax cuts. The amount of taxes that working folks save is far less than the diminished services those tax cuts caused. By keeping any of the Bush tax cuts, Democrats are legitimizing the actions of a criminal who has now written a book telling us he is a criminal.
It is no longer just the opinion of progressives that Dubya is a criminal. It is a fact, and Nancy Pelosi needs to be prosecuted along with Dubya for her complicity when she told the world "impeachment is off the table".
You may as well throw in Obama too not only for his "looking forward and not backward" speech and aiding & abetting Ugly Nancy but also because of the number of crimes he has personally committed or facilitated to be committed.
I am truly amazed that you can get your head so far up yourself that you can see the keyboard through your teeth.
Grand theft no matter which way one looks at it. Tony
Good luck getting the newly-empowered Republicans to agree to any significant cuts to the military budget.
Good luck getting the newly-empowered Republicans to agree to even the most modest increase in federal gasoline taxes, or to anything else that looks even vaguely like a "carbon tax" -- even if those moneys are specifically earmarked for something our nation obviously needs badly, such as upgrades to our schools, repairs to our public works, improvements to our public transit systems.
Good luck getting the newly-empowered Republicans to refrain from trying to confuse the public about Social Security, for example: the relatively minor tweaks required to keep Social Security solvent for decades to come, and the appropriateness of keeping the SS budget sharply separated from the rest of the Federal budget by a thick firewall.
Good luck. They are too busy clamoring for yet another war (against Iran). Not that the Dems are much better. This country is, I'm afraid, basically screwed.
The final nail in the coffin was the Supreme Court's 'Citizens United' decision. So now corporations can pretty much openly and shamelssly buy whatever outcome they want ... because who the hell can stop them at this point, anyway, no matter what the outrage? Worse comes to worse, they'll just move their operations to another country ... something that 300 million American citizens can't so easily do, but who cares when you're a fictional corporate "person".
When Clinton took an ax to the New Deal, ending aid to America's poorest, America yawned with indifference, so we knew Social Security would be next. Most families are already stretched to the limit. How can they now provide for elderly and disabled family members, when they are struggling to keep their children fed and sheltered? Yes, it really is that bad for a good chunk of the population today. Many simply won't be able to do it, so what will we do with all the elderly and disabled who suddenly have no means of survival? I still need to believe (in spite of the apathy following welfare "reform") that we won't let the elderly and disabled simply die in the streets. So, we would have to put them into institutions, which would cost far more than Social Security itself.
What is so stunning is that Social Security CAN be fixed and strengthened simply by ending the Bush tax cuts for the wealthiest. We can build of a massive surplus by raising corporate taxes to pre-Reagan levels. The alarmists insist that this will result in "massive job loss." Wake up, fools -- some 30 years of massive, annual corporate tax relief has left us with fewer - NOT more - jobs, at deteriorating wages. This money has been used to move our jobs to foreign countries, building factories and training workers outside of the US.
What is the worst thing that could happen if we restored pre-Reagan tax rates on the rich? Well, they might throw a hissy fit, but that's about all. They can leave the country if they want. Based on everything we've seen over the past 30 years, they would actually be less likely to export jobs. If they want workers, they might have to improve wages, etc. Would we be worse off?
Social Security is in no immediate need of being "fixed." There's enough there to fund payments for roughly the next 30 years - and the majority of payments thereafter.
If those who raided the fund to pay for wars and tax cuts for the wealthy think they can now claim that the IOUs they left ought to be paid for by cutting benefits to the people whose SS taxes were raised to balance the fund in the first place, they've got a fight on their hands. (Including from the "Keep your hands off my Medicare!" tea party crowd.)
IF you want to strengthen the system and fund payments going beyond those three decades, all we need to do is to raise the SS cap: tax all earnings, going beyond the current cap at just over $100,000. If we abolished the cap altogether, we could be talking about how much to **lower** the retirement age.
Another great income-producer: tariffs. (That would be for the general budget, not Social Security.)
PSST! There's nothing "there". There's no money or other assets in the Social Security "trust fund" only unsecured promises to pay. An unsecured obligation of the U.S. Government is not ny different from any other unsecured promise to pay (an IOU, for example). If the moneys were in fact held in money market instruments or a balanced portfolio of U.S. Government bonds, or for that matter other AAA debt that could readily be sold to realize value, that would be different. The U.S. government "obligations" in the Social Security "trust fund" are not U.S. Treasury Bonds or other real assets; they are notional only and are not saleable, an accounting mirage designed to comfort the ignorant.
See: Wikipedia "Social Security Trust Fund", available at: http://en.wikipedia.org/wiki/Social_Security_Trust_Fund:
"Unlike a typical private pension plan, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. Instead, it holds non-negotiable United States Treasury bonds and U.S. securities backed 'by the full faith and credit of the government'. The Office of Management and Budget has described the distinction as follows:
"'These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.' (from FY 2000 Budget, Analytical Perspectives, p. 337)"
They can indeed be sold - back to the Treasury. And they have a variable sale date: they can be redeemed at any time the bearer chooses.
The problem you refer to is what Al Gore was talking about when he referred to a "lock box." (One of the reasons the corporate media pilloried him.)
The money was already raised, we were already taxed. If they have to make it up, too bad - they can get it elsewhere. Raise the SS cap, or better yet, abolish it altogether. Return to at least pre-Reagan tax rates. Close 50 - 100 military bases per year. Tax capital gains at the same rate as other forms of income. I assume you actually work for a living. Why should you have to pay Social Security taxes **and** a higher tax rate than someone who does nothing for his income?
The nonsense that they raided the Social Security fund to help hide their deficits, so now they can change the rules won't fly. I think people have had about enough of this horse hockey and they will remember the promise that was made - particularly this current generation, the ones who paid a roughly doubled Social Security tax.
TAX THE RICH!!!! 39% is not enough. Raise the tax on income over $250,000 per year to 70%, the same level as under Nixon. Tax the rich before forcing the middle class to bear more of the burden.
The wealthy scream class warfare!? Ok, I don't have a problem with that. Just remember the French revolution. Who won? It wasn't the rich.
Unfortunately the rich did win the French Revolution. It was a capitalist revolution, btw.
Oh, yeah. This proposal is a beaut, everything you would expect from the Republicans. Funny too how it didn't take them any time at all to come up with that.
Raise the retirement age? Oh, that will help the unemployment situation. Have seniors stay in the workforce longer. Where are the younger folks going to find jobs if they are tied up by the older generation?
No, keep the retirement age where it is and raise the cap on income so more revenue comes into the trust fund.
My job is euphemistically called underground construction. I'm sixty five and not sure how much trench I can dig at seventy. Namora is short for naked mole rat.
How about get out of Iraq (really) and Afghanistan. Then there'd be loads of money. Or, how about taking all the money that was in the social security "Lockbox" over the years that was borrowed by the government and give it back to social security. Then there'd be no problem.
Or, how about telling the truth: that the richest simply want to strangle everyone else and take as much for themselves as they possibly can, while maintaining the fiction that this is a democracy, not a plutocracy.
We need to amend the constitution to define a person as a single human being, not a corporation. That's the first step. Until that happens all this other stuff is just shadow boxing.
The first step is public financing of campaigns and to kick the lobbyists out. Course then what would retired congresspersons do? I guess they could hold up 7-11s instead of robbing us, as they are doing now.
Social Security is a dedicated tax that goes straight to Social Security w/ the excess spent on the General Budget -
if they cut SS shouldn't the rate go down?
and to all the people who say - there is no SS surplus because it gets spent..... we receive noters for those funds just as China receives notes for the amount they "loan" the usa.....
funny but I never hear people say we're never going to pay china back -
it's only Social Security that gets the hammer - because it is a regressive tax -
What a great way for the obamination to destroy the democrats and depress the base -
Those who are interested in learning why the 'Cat-food Commission' or 'social security wrecking crew' are completely clueless/mistaken, check out the results of the Fiscal Responsibility Teach-In and Counter- Conference which was held earlier in April of this year at GW Univ, Washington, D. C.:
http://neweconomicperspectives.blogspot.com/2010/10/fiscal-sustainability-teach-in-and.html
In this conference, a number of economists and financial experts explained why the 'deficit terrorists' are not only wrong in their basic arguments; they apparently do not understand how modern money (sometimes abbreviated- MMT) currency operations actually take place. They also have erroneous concepts of macroeconomics. If you are interested in learning why/how the super-rich have captured the stage, you will have to learn a lot about economics theory; fortunately, such information is available at the above link. Even though President Obama has unqualified economics advisers and appears unable to understand why the deficit terrorists have encountered no opposition, there is no reason to believe such deceivers. Learn about modern money and you will understand. By the way, the modern money economics experts are generally unable to communicate in the MSM; haven't yet figured exactly why, but suspect that most commentators also don't understand macroeconomics.
After 30 years of a loosening labor market due to 1) computers replacing jobs, 2) women entering the workforce, and 3) immigration of foreign workers, and by the fact that none of these can be reversed, the only way to shrink the deficit is to tighten the labor market by lowering the age of medicare eligibility. Also, increase social security taxes on anyone making over 100k a year to 13% like everybody else pays. And finally, drastic cuts to the Pentagon, a black hole for money with no return on investment other than more war.
These actions will do three things. 1) it will provide jobs, 2) guarantees social security remains solvent, and 3) transfers from defense, money for domestic spending/manufacturing that's so desperately needed.
See the lecture by Richard Wolff, "Capitalism Hits the Fan" and read/listen/watch Thom Hartmann for more.
Upping the retirement age would cause all sorts of problems. Many older people would not be able to even find a job, so they couldn't retire but also could not work. Also, young people need jobs to get their lives started. In this economy it's hard enough to find a job without flooding the market with people from every age group young and old alike. Finally, if young people have to compete for jobs and can't find them, who's going to be paying into the Social Security fund for the future?
And when can Congressmen retire under their pension plan?
According to the attached Congressional report, they can retire with full benefits as early as 50 and late as 62, depending on the how long they've been in office.
http://www.senate.gov/reference/resources/pdf/RL30631.pdf
I haven't yet looked at that link you have graciously provided (your words spoke volumes) because I really do not want to ruin the rest of my already bad evening! I will wait until tomorrow so I can really enjoy how pissed off I am going to be when I see what's inside! (like the healthcare bill that excluded congress, their families and employees).....
This commission wasn't even necessary.
Obama and the Democrats could have just attempted to fix social security through legislation without the commission and without the Republicans when it had a majority in Congress. The solutions to social security have been researched, discussed and debated for decades.
It is just another agenda item Obama is throwing in the compromise towel even before the debate begins. With a start of a new congressional session, will Pelosi attempt to change the filibuster rules (or even force real filibusters), or will she just use the Republicans as an excuse for another year?
This 18 person commission can do nothing at all IF five of the 18 commission members rear up on their hind legs like truly advanced primates and say no. Name those five. Put their names absolutely everywhere. Then write them, phone them, write their brothers-in-law, write their dentists. That's how to stop a rich people's commission. Force every single member of Congress to publicly stand up for their unassessably wealthy friends who got so many of their colleagues fired, and maybe in the end they won't!
Meow meow meow meow.... How about a Meow Party?
Here are the targets!
http://www.fiscalcommission.gov/members
Co-Chairmen:
Sen. Alan Simpson. Former Republican Senator from Wyoming.
Erskine Bowles, Chief of Staff to President Clinton
Executive Director:
Bruce Reed, Chief Domestic Policy Adviser to President Clinton
Commissioners:
Sen. Max Baucus (D-MT)
Rep. Xavier Becerra (D-CA 31)
Rep. Dave Camp (R-MI 4)
Sen. Tom Coburn (R-OK)
Sen. Kent Conrad (D-ND)
David Cote, Chairman and CEO, Honeywell International
Sen. Mike Crapo (R-ID)
Sen. Richard Durbin (D-IL)
Ann Fudge, Former CEO, Young & Rubicam Brands
Sen. Judd Gregg (R-NH)
Rep. Jeb Hensarling (R-TX 5)
Alice Rivlin, Senior Fellow, Brookings Institute and former Director, Office of Management & Budget
Rep. Paul Ryan (R-WI 1)
Rep. Jan Schakowsky (D-IL 9)
Rep. John Spratt (D-SC 5)
Andrew Stern, President, Service Employees International Union
Five of these. That's what we absolutely need to block bad legislation. Five. Not four. Spread this everywhere.
Geez, what a Rogue's Gallery!
It almost tripped some atavistic reflex to obtain a flask of holy water forthwith and sprinkle it all over this computer.
OS: I had a very similar reaction as I read through the names. YIKES!
And how many of these commissioners will need Social Security in their retirement?
Thank you PaulK.
A sickening list, worthy of a scene from Oliver Twist. Where are people from organizations like Children's Defense Fund, Labor (besides Stern), Nurses? Are there any advocates for stock transfer tax or raising the tax rate on mammonic incomes? Anyone there who will cut war spending? Notice three women out of 19 appointees.
These are St. Obama's choices, not Glen Beck or Sarah Palin's.
Obviously this group is destined to target women, children, the old, the sick and those who work at hard jobs that they cannot continue to do in older years. Many many people will end up homeless and hungry and weary and sick and sore - nickle and dimed to death through the fine work of this group of wealthy assholes.
If you belong to anything, please protest in any way you can.
Joe
Great comments, Joe!
Thanks, Paul K. for the ominous list -- working on behalf of corporate interests, and not in the name of the people. You make an excellent point that we only need to work to influence 5 of the above individuals.
It is a scene straight out of Charles Dickens!
We found out, after the fact, that Obama met behind closed doors, making backdoor deals with the various executives in charge of the health industries. He continues -- more of the same. He has NO sense of decency!
Thanks.