Posted on 07/19/2011 11:10:16 AM PDT by freespirited
The once moribund Senate “Gang of Six” regained new life Tuesday after Oklahoma Sen. Tom Coburn unexpectedly rejoined the group — and more senators are now coalescing around a new proposal that would cut the debt by as much as $3.7 trillion over the next decade.
Other top senators are also getting behind the plan, including Sen. Lamar Alexander (R-Tenn.), the No. 3 Senate Republican, who told a group of senators Tuesday he would back the Gang of Six’s proposal, sources say. The fast-moving developments mean that elements of the proposal could influence the stalled talks to raise the debt-limit before the Aug. 2 deadline.
According to a copy of the plan, obtained by POLITICO, the group would impose a two-step legislative process that would make $500 billion worth of cuts immediately followed by a second bill to create a “fast-track process” that would propose a comprehensive bill aimed at dramatically restructuring tax and spending programs. The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the measures on the floor.
The $500 billion in cuts would come from a range of sources, including shifting to a new consumer price index to make cost-of-living adjustments to Social Security. The plan would impose statutory spending caps through 2015, freeze congressional pay and sell unused federal property.
To enact a comprehensive deficit plan, the group calls for congressional committees to report legislation within six months that would “deliver real deficit savings in entitlement programs over 10 years,” the plan says.
It calls on the Finance Committee to permanently reform or replace Medicare’s Sustainable Growth Rate - an outdated formula aimed at determining the amount to reimburse doctors for treating Medicare patients - by $298 billion.
The Finance Committee would be instructed to deliver “real deficit savings” through simplifying the tax code and raise as much as $1 trillion. It would do this by establishing three tax brackets with rates of 8-12 percent, 14-22 percent and 23-29 percent. It would permanently repeal the $1.7 trillion Alternative Minimum Tax. And it calls for establishing a single corporate tax rate, between 23 percent and 29 percent, and to move to a competitive territorial tax system.
Overall, the group claims it would result in a $1.5 trillion net tax decrease.
The group punts many of the specifics to other committees, which would be asked to find savings in discretionary and mandatory spending. This includes: $80 billion out of Armed Services; $70 billion out of Health, Education, Labor and Pensions; $65 billion out of Homeland Security and Government Affairs; $11 billion out of Agriculture; $11 billion out of Commerce; $6 billion out of Energy and Natural Resources. The Judiciary Committee would be asked to find savings through medical malpractice reform.
The group spent ample time proposing ways to expedite the legislative process should there be a stalemate in committee.
If any committee cannot propose cuts, it would would impose “across-the-board” cuts to programs under the panel’s jurisdiction. It would exempt programs aimed at low-income communities.
To avoid gridlock, floor amendments that upset the deficit-reduction goals would be ruled out of order. Any bill that could receive 60 votes would be held at the desk until the Senate considers the separate Social Security bill.
Once a comprehensive deficit plan has the votes, a measure aimed at ensuring 75-years of solvency of Social Security would head to the floor. The Finance Committee would be required to recommend the Social Security changes.
Senators in the Gang of Six - Kent Conrad (D-N.D.), Dick Durbin (D-Ill.), Mark Warner (D-Va.), Mike Crapo (R-Idaho) and Coburn - discussed the proposal with 43 senators Tuesday morning on the first floor of the Senate, after more than six months of struggling to broker a deal.
Coburn left the group in May but suddenly rejoined after the group added $115 billion in additional health care cuts and included the provision allowing senators to circumvent the stalled committees.
“I’m back,” Coburn told the big group Tuesday, prompting a round of applause.
In what way will your taxes be raised?
In what way will your taxes be raised?
He announced his plan, but obviously you can't be the only one who votes for something and see it pass. It was going nowhere.
But what did seem to happen was that the group must have embraced a bunch of his ideas to come up with the $3.7 figure. Up to now I haven't seen these ideas expressed. The Obama plan did not have these same ideas.
A proposed cut of $3.7 trillion over 10 years means that there will be little if any actual cut in spending.
We need more than $3.7 trillion cut over the next two years.
That is money taken out of the pockets of working men and women and then borrowed to send out grants to school teachers with better health care and retirement plans than any working men ever imagined.
There's other stuff, but I thought I'd remind everyone of what the Democrats did with their half century of dominance of the Congress.
1 trillion in new taxes right away, 370 billion a year in “cuts” over ten years. Some of the “cuts” are from “savings” that if targets are not met can be made up by( read additional taxes) an expedited vote of the senate.
The Constitution only explicitly prohibits appropriations to the Army and Navy than are of a longer term than two years. (Article I, Section 8).
As I recall there are court cases that limit the ability of one congress to tie the hands of later congresses, but I don't know the details of this.
The summary is on ZeroHedge.
All couched in generalities, except that they will reduce or eliminate the middle class’s tax deductions for their homes and their retirements.
So 37 cents this year and 4 trillion in the tenth year?
Elimination or reduction of the home mortgage interest, reducing the amount we can contribute tax-free to our retirements, and raising the tax on capital gains, dividends and interest.
I was wrong.
“the proposed $3.75 trillion in savings over 10 years contains $1.2 trillion in new revenues.”
So its 1.2 trillion in new taxes and 255 billion a year in “cuts” over a ten year period.
I didn't see these in the story. Did I somehow miss it or is it being reported elsewhere?
IMHO...
My own little proposed spending cuts - a starting point - in 2011 spending levels, in Billions, without touching Social Security, Medicare or Defense (this all can be cut in ONE YEAR):
_________________________________________________________________________
Education__________________ $129.8 billion
Transportation (I propose
a limit of $10 billion)_________ $84.5 billion
Basic research______________ $18.7 billion
Agriculture, forestry
, fishing and hunting _________ $32.8 billion
Fuel and energy_____________ $26.9 billion
Pollution abatement_________ $10.9 billion
Protection of biodiversity
and landscape_______________ $13.9 billion
Housing development_______ $35.5 billion
Community development_____ $25.7 billion
Recreational and
sporting services_____________ $4.1 billion
General Government
(I propose cutting the
current amount in half)_______ $16.6 billion
Welfare (eliminate)_________ $495.0 billion
Grants to States
for Medicaid________________ $276.2 billion
R & D Health
(includes NIH)______________ $36.1 billion
Total reduction to annual
spending_________________ $1,206.7 billion
_________________________________________________________________________
That sets an upper bounds on any appropriation.
$700 per month? Either SS payments have got higher than I realized, or they’re talking after QE14 sinks in and we’re pickled in hyperinflation.
I’m sure it depends on how far they project into the future.
The power of compounding can reward or kill depending on which side you’re on.
I think I had read the article here actually. I looked back at my history at the links that turn purple after you click on them, but could not find it, so perhaps I did not read it here, or I imagined that I had read when I got up this morning.
And yes, I think the article did allude to inflation being a factor, which is what they were talking about, projected inflation, and then the decrease in cost of living, which will be a double whammy.
I will look around later on some of the other sites I visit and see if I can find it, or maybe someone else read the article and could post it, because I can’t for the life of me find it (Alzheimer’s may be setting in early). I apologize, but will keep looking later this afternoon.
Say goodbye to the home mortgage deduction, employer-provided health insurance (by eliminating the tax deductibility of employer-provided insurance) and your 401K plan.
This is the worst possible plan, which is why Obama supports it. It should be political death for any Republican that votes for it.
The Good
o Unlike President Obama, the Gang of Six is not consumed by class-warfare resentment. The plan envisions that the top personal income tax rate will fall to no higher than 29 percent.
o The corporate income tax rate will fall to no higher than 29 percent as well, something that is long overdue since the average corporate tax rate in Europe is now down to 23 percent.
o The alternative minimum tax (which should be called the mandatory maximum tax) will be repealed.
o The plan would repeal the CLASS Act, a provision of Obamacare for long-term-care insurance that will significantly expand the burden of federal spending once implemented.
o The plan targets some inefficient and distorting tax preference such as the health care exclusion.
The Bad
o The much-heralded spending caps do not apply to entitlement programs. This is like going to the doctor because you have cancer and getting treated for a sprained wrist.
o A net tax increase of more than $1 trillion (I expect that number to be much higher when further details are divulged).
o The plan targets some provisions of the tax code – such as IRAs and 401(k)s) – that are not preferences, but instead exist to mitigate against the double taxation of saving and investment.
o There is no Medicare reform, just tinkering and adjustments to the current system.
o There in no Medicaid reform, just tinkering and adjustments to the current system.
The Ugly
o The entire package is based on dishonest Washington budget math. Spending increases under the plan, but the politicians claim to be cutting spending because the budget didn’t grow even faster.
o Speaking of spending, why is there no information, anywhere in the summary document, showing how big government will be five years from now? Ten years from now? The perhaps-all-too-convenient absence of this critical information should set off alarm bells.
o There’s a back-door scheme to change the consumer price index in such a way as to reduce expenditures (i.e., smaller cost-of-living-adjustments) and increase tax revenue (i.e., smaller adjustments in tax brackets and personal exemptions). The current CPI may be flawed, but it would be far better to give the Bureau of Labor Statistics further authority, if necessary, to make changes. A politically imposed change seems like nothing more than a ruse to impose a hidden tax hike.
o A requirement that the internal revenue code maintain the existing bias against investors, entrepreneurs, small business owners, and other upper-income taxpayers. This “progressivity” mandate implies very bad things for the double taxation of dividends and capital gains.
This quick analysis leaves many questions unanswered. I particularly look forward to getting information on the following:
1. How fast will discretionary spending rise or fall under the caps? Will this be like the caps following the 1990 tax-hike deal, which were akin to 60-mph speed limits in a school zone? Or will the caps actually reduce spending, erasing the massive increase in discretionary spending of the Bush-Obama years?
2. What does it mean to promise Social Security reform “if and only if the comprehensive deficit reduction bill has already received 60 votes.” Who defines reform? And why does the reform have to focus on “75-year” solvency, apparently to the exclusion of giving younger workers access to a better and more stable system?
3. Will federal spending under the plan shrink back down to the historical average of 20 percent of GDP? And why aren’t those numbers in the summary? The document contains information of deficits and debt, but those figures are just the symptoms of excessive spending. Why aren’t we being shown the data that really matters?
Over the next few days, we’ll find out what’s really in this package, but my advice is to keep a tight hold on your wallet.
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