Breaking down the deficit commission report
Published 10:45 am Friday, November 12, 2010
This week the Obama authorized bipartisan federal deficit commission reported on how the nation might restore fiscal sanity through a combination of spending cuts and tax increases.
Co-chairs Erskine Bowles (D) and Alan Simpson (R) produced the report and will now seek to gain the support of 14 of the 18 committee members to require Congress to address their recommendations.
Other than restoring American jobs lost in the recession, nothing could be more important than reducing the deficit hole in the federal budget.
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So how did Bowles and Simpson do with their project?
If you are a Republican who seeks lower tax rates to solve a fiscal crisis, they did quite well. But if you are a middle class American you should worry a great deal, for their solution is loaded firmly upon your back.
The short version is this:
1. Remember when your home was often your best investment? Then the banks trashed your equity and the housing market collapsed, leaving you with a neighborhood of low-priced foreclosed homes and a sharply reduced value in your primary investment.
Well, the other shoe has fallen. The commission recommends that your tax breaks for your mortgage are going away.
2. You may know better than the two co-chairs how expensive it is to raise children today. They seem not to understand why you receive a tax reduction for those dependents and plan to eliminate that savings.
3. Think that regressive taxes, those that place a heavier burden on the lowest incomes are a good idea? Hope so, because the commission wants to raise the federal excise tax on gasoline by 15 cents per gallon.
4. And if you had hoped that paying into Social Security all your working years would provide you retirement income and health care …well, they just got more expensive.
The commission wants to raise the retirement age to 69 over a gradual period. But that is not all. They think you should pay more in deductibles and co-payments when you use Medicare.
But, to be fair, isn’t it unavoidable that people, all of us, will have to pay more to reduce the deficit? After all, shared sacrifice is the currency of this problem, right?
Wrong … one conclusion of the commission is a reduction of tax rates, lowering the top tax rate on the richest Americans from 35 percent to 23 percent, and reducing the current six rates to three rates.
So while you pay more and get less, the taxes of the richest Americans taxes fall sharply in this form of “shared sacrifice.”
Oh, but that is not all.
The commission wants to reduce the corporate income tax rates from 35 percent to 26 percent. Yes, that’s right … while our corporations have been reporting high profits and huge collections of cash, the commission wants to lower their taxes while you pay for the debt and deficit.
There are spending reductions in many areas recommended. There is even a very, very modest cut in the defense budget — a budget currently about equal to all the defense budgets on the planet annually.
Hardly a significant approach to serious overspending.
Hopefully Congressional Democrats will find their courage, and like the cowardly lion, roar with the outrage you need to destroy these recommendations before they become policy.
Hopefully the Democrats in Congress will refuse to allow the debt created largely by Republican policies to be paid for by the middle class while rewarding the richest Americans with still more tax cuts.
If Democrats want to win in 2012, here is a simple path to success: campaign on “Jobs Made in America and Fair Taxation.”
Jim Crawford is a contributing columnist for The Tribune and a former educator at Ohio University Southern.