Social Security, Medicare, Pentagon slashed by deficit commission
Under the proposal, Medicare spending, Social Security, the Pentagon's budget, and earmarks would be curtailed in a plan that cuts $3 in spending for every $1 in tax increases.
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The plan arrived a week after congressional elections in which voters demanded action on the $1 trillion-plus budget deficit.Skip to next paragraph
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"This debt is like a cancer that will truly destroy this country from within if we don't fix it," Bowles warned.
Current deficits require the government to borrow 37 cents out of every dollar it spends.
The entire 18-member commission is supposed to report a deficit-cutting plan on Dec. 1, but panel members are unsure whether they'll be able to agree on anything approaching deficit cuts of the size proposed. And even if they could, any vote in Congress this year would be nonbinding, Simpson said.
During the campaign, neither political party talked of spending cuts of the magnitude offered Wednesday, with Republicans proposing $100 billion in cuts to domestic programs passed each year by Congress — but with no specifics.
The plan would gradually increase the retirement age for full Social Security benefits — to 69 by 2075 — and current recipients would receive smaller-than-anticipated annual increases.
Equally controversial, it would eliminate the current tax deduction that homeowners receive for the interest they pay on their mortgages and impose a 15 cent-a-gallon tax on gasoline.
It would impose a three-year freeze in the pay of most federal employees and a 10 percent cut in the federal work force. Congressional pet spending projects, known as "earmarks," would be eliminated.
No one is expecting quick action on any of the pieces of the plan. Proposed cuts to Social Security and Medicare are making liberals recoil. And conservative Republicans are having difficulty with options suggested for raising taxes. The plan also calls for cuts in farm subsidies, foreign aid and the Pentagon's budget.
It was rejected as "simply unacceptable" by House of Representatives Speaker Nancy Pelosi, a top Obama ally.
The Social Security proposal would change the inflation measurement used to calculate cost-of-living adjustments for benefits, reducing annual increases. It immediately drew a withering assault from advocates for seniors, who already are upset that there will be no inflation increase for 2011, the second consecutive year.
The plan also would raise the regular Social Security retirement age to 68 by about 2050 and to 69 in 2075. The full retirement age for those retiring now is 66. For those born in 1960 or after, the full retirement age is now 67.
From the right, anti-tax activist Grover Norquist, whose opinions carry great weight among Republicans, blasted the plan for its $1 trillion in tax increases over the coming decade. But Bowles and Simpson say eliminating costly tax deductions could allow income tax rates to be brought way down.
The proposal would leave Obama's new health care overhaul in place while greatly strengthening its cost-control provisions.