PatriotPost.US Barack Obama's 18-member bipartisan deficit commission is expected to release its full report on the nation's fiscal nightmare by Dec. 1. The commission is tasked with reducing -- or at least advising Congress and the White House on how to reduce -- Obama's disastrous deficits from the current 8.9 percent of GDP to just 3 percent by 2015. The commission is the president's way of appearing to be serious about cutting federal spending, while maybe getting Republicans to agree to raise taxes while he's at it.
This week, commission members began leaking ideas. First, apparently thinking that voters were just kidding in their decisive demand that Congress control spending and cut taxes, Senators Tom Carper (D-DE) and George Voinovich (RINO-OH) urged Congress to raise gas taxes by 25 cents per gallon in order to -- get this -- increase spending on infrastructure. Carper and Voinovich say that 10 cents of the tax hike should go to deficit reduction and the remainder to transportation funding to repair bridges and roads. Voinovich claims the new revenue would create 775,000 new jobs. Ah, yes, economic growth and recovery through tax hikes -- we've seen how well that works.
Following that, Chairman Erskine Bowles, Bill Clinton's White House Chief of Staff, and former Wyoming Republican Sen. Alan Simpson, the co-chairman, released their own preliminary report on Wednesday in which they sided, at least in part, with the tax-and-spenders by suggesting a 15-cent spike in the gas tax1, part of $751 billion in total tax hikes over 10 years. The pair recommends that tax revenue level out at 21 percent of GDP, which is much higher than the historic average of 18 percent.
The proposal also includes eliminating the child tax credit and the mortgage interest deduction, while significantly reducing overall tax rates. For example, the top rate of 35 percent would fall to 24 percent, with just two lower rates of 15 and 9 percent. The corporate tax rate would be cut from 35 percent to 26 percent, which would finally be competitive with the rest of the world.
Bowles and Simpson offered ideas to cut nearly $4 trillion from the federal budget by 2020. That's a good start, but it's not nearly enough. If their measures are followed -- a big "if" -- the deficit would drop to 2.2 percent of GDP, which ends up leaving them some wiggle room to reach their mandate. Their ideas include cuts to Social Security and Medicare, two of the largest budget allocations; $410 billion in cuts to discretionary spending by 2015; a three-year pay freeze for most federal employees, on top of a 10 percent cut in the total federal workforce; and eliminating funding for the Corporation for Public Broadcasting.
"We'll both be in a witness protection program when this is all over, so look us up," quipped Simpson. Both are quick to admit that the proposal would likely be a nonstarter in Congress. With a no-holds-barred approach to so many sacred cows, it's easy to see why. First, 14 of the 18 commission members must agree on a final report -- and that's the easy part. Then Congress has to make the hard choices, which, if history is any guide, members will avoid like the plague.
Quote of the Week "The deficit commission appears to have adopted the flawed notion that taxes and revenues are a zero-sum game -- that tax increases produce higher revenues, when more often the opposite is true. For example, does anyone doubt that the commission's proposal to eliminate the mortgage interest deduction would detrimentally impact the housing (and possibly financial) market? Equally important, how can this commission be taken seriously if it sanctions Obamacare, which not only is wildly unpopular with the American people but also greatly burdens the federal fiscal equation? Many are praising the commission's 'boldness' in proposing to reduce the growth of the federal deficit by $3.8 trillion by 2020 from its projected growth of $7.7 trillion. That's like an alcoholic promising to cut down his liquor consumption from two bottles of bourbon a day to one. Obama, who initiated (and stacked) this commission as an Alinskyite strategy to turn the tables on Republicans on the spending issue, must be laughing all the way to the statist bank." --columnist David Limbaugh
Read More: http://patriotpost.us/edition/2010/11/12/digest/print/