The Direckshun Grand Bargain

[Direckshun]

YAY: 2
NAY: 25
(Last time totaled up: 12:43am on December 10)

After perusing several different budget control plans, from Boehner's proposal to Obama's proposal, Simpson-Bowles and plans from various liberal, conservative, and independent think tanks, this is the plan I've cobbled together that I think would responsibly cut the deficit over the next decade and perhaps beyond.

What I want you to do: vote. But your vote must be on the totality of DGB -- any statement where you say you'll vote on this "except for" this part or that part will be considered a "no" vote.

You are welcome, as always, to pick it apart and do your thing, but your post will be construed as a yes or a no vote based on my interpreation, and added to the vote totals accumulated in the vote totals at the top of the OP.

"DGB" will be the abbreviation for the Direckshun Grand Bargain from here on out.

THE DIRECKSHUN GRAND BARGAIN (6 trillion)

• Should reduce our debt by 60% by 2040.
• Will raise the debt limit an appropriate amount, but will otherwise not change how the debt limit is handled.
• All estimates are for 2013-2022, but DGB auto-renews every decade unless Congress acts.
• All these savings will result in $850 billion saved in interest that won't have to be paid.
• Would make the "fiscal year" two calendar years.
• Does assume some costs of already existing cuts and new taxes.

Mandatory Spending Cuts (over 300 billion):

• Reduce farm subsidies. (20 billion)
• Savings on government (& military) pensions, largely by saying you can vest sooner but must collect later, reforming COLA payments and making federal workers pay more into the pension. (70 billion)
• Increase spending on integrity programs for programs with improper payment problems (Medicare & disability). (should save 30 billion eventually)
• Miscellaneous cuts (150 billion)
• Measure inflation better. (50 billion)

Discretionary Spending Cuts (2.2 trillion):

• Reduce defense spending by 1.3 trillion (closing 1/3 military bases, cut down on contractors as well as their compensation).
• All of the cuts from the Budget Conrol Act of 2011 will be enforced. (900 billion)

Revenue Increases (2.5 trillion):

• Bush tax cuts for the wealthy expire. (1.1 trillion)
• Tax reform: repeal AMT, capital gains and dividends are taxed as normal income, repeal state and local taxes, cafeteria plans, and many kinds of itemized deductions, and drastically reduce deductions on charity.
• No more mortgage deduction for 2nd homes, homes worth more than 500k, or HELOCs.
• Reduce income tax exclusion for employer healthcare.
• Three tax rates: 15%, 25%, and 39%, raising taxes on the rich while broadening the base, and simplifies the code.
• These pieces of tax reform, put together, will add up to 1.25 trillion.
• Raise the gas tax $0.15 in 2013. (150 billion)
• Adjust how the government measures inflation to a more accurate measure. (90 billion)

Healthcare & Social Security (850 billion):

• Obamacare's shifting payment schemes that compensate doctors less, improve efficiency, and shift the healthcare system to a system that compensates on quality, not quantity.
• Tort reform, including paying lawyers less.
• Close the Medicare donut hole.
• Improve Medicare's cost sharing.
• Identify additional $200 billion in federal healthcare spending by 2020.
• Improve some social security benefits, in particular minimum payments for people with lifetime minimum wage jobs and helping out the oldest retirees. (This will actually cost around 50 billion.)
• Raise social security age to 67.
• Increase the maximum at which you can tax somebody for social security (200+ billion).
• Measure inflation better for social security (150 billion).

Do your worst. Poll forthcoming.

[A Salt Weapon]

Nope, eliminate every federal agency except for military, eliminate every dollar of federal spending outside of military. Reduce tax rates to .001% of income.
Everything else is reserved to the states.
Problem solved.
Posted via Mobile Device

[Brainiac]

I voted no because your plan is pure fantasy.

By putting numbers on each individual line item, you are implying a level of precision that simply isn't there.

I'm still trying to figure out how repealing state and local taxes increases revenue. And 200 of your 300 billion in mandatory spending cuts consists of "miscellaneous cuts" and "measure inflation better".

Um, OK.

[BigRedChief]

Originally Posted by A Salt Weapon

Nope, eliminate every federal agency except for military, eliminate every dollar of federal spending outside of military. Reduce tax rates to .001% of income.
Everything else is reserved to the states.
Problem solved.
Posted via Mobile Device

Nice fantasy you painted for yourself there.

[LiveSteam]

LETS ALL

[mnchiefsguy]

Sorry, had to vote no. Way too many tax increases, plus you are counting on Obamacare to be contributing to reducing the debt, when everyone knows it is a black hole of spending.

[Trivers]

Appreciate your effort and thought; but everyone needs to feel the pain of reform. Why just the 2% when 51% don't pay income tax?

No real entitlement cuts.

Fair flat tax.

[Direckshun]

Originally Posted by Brainiac

I voted no because your plan is pure fantasy.

Probably.

Originally Posted by Brainiac

By putting numbers on each individual line item, you are implying a level of precision that simply isn't there.

I largely copied the dollar amounts from experts from CAP to Heritage, who've provided the items I cherry picked.

This is how absolutely any deal that gets made is going to look. This is what Obama did when he turned in his proposal, it's what Boehner did when he turned in his. This is how the process works.

To shoot down a $6 trillion dollar deal because it might be off a few billion is silly.

Originally Posted by Brainiac

I'm still trying to figure out how repealing state and local taxes increases revenue. And 200 of your 300 billion in mandatory spending cuts consists of "miscellaneous cuts" and "measure inflation better".

Oh come now. I only used the phrase "miscellaneous" once, and it was $150 billion. Surely you're not going to say $150 billion is going to stand in the way of a $6 trillion plan.

As for the measure inflation better, it comes down to CPI. The federal government measures CPI too aggressively, assuming for too much inflation and spending on that miscalculation. There's support from both the right and the left to adjust CPI to a more manageable, accurate number. That alone will save billions.

[Direckshun]

Originally Posted by Trivers

Appreciate your effort and thought; but everyone needs to feel the pain of reform. Why just the 2% when 51% don't pay income tax?

No real entitlement cuts.

Fair flat tax.

I don't know what counts as entitlement cuts, but there are some in there.

I advocated broadening the base, by the way.

[Bo's Pelini]

In the words of Dane McCloud

"**** off"

[Direckshun]

So far, everybody who's posted has a vote on the record, so the poll's vote total stands.

Yay: 1
Nay: 9

Edit: Just saw Billay's post. Make that 10.

[Taco John]

This plan would choke the economy. Getting rid of things like mortgage deductions and income tax exclusion for employer healthcare are great ways to slow housing and job recovery. Also, a 40 percent tax rate is ridiculous. No one should owe the federal government 40% of what they earn. Nor should they owe 15% or 25% of what they earn for that matter.

I think that we've got to go off this "cliff" and let it roll. I think this is a better "grand" "bargain" than any plan I've seen yet.

[Direckshun]

Originally Posted by Taco John

This plan would choke the economy. Getting rid of things like mortgage deductions and income tax exclusion for employer healthcare are great ways to slow housing and job recovery. Also, a 40 percent tax rate is ridiculous. No one should owe the federal government 40% of what they earn. Nor should they owe 15% or 25% of what they earn for that matter.

I think that we've got to go off this "cliff" and let it roll. I think this is a better "grand" "bargain" than any plan I've seen yet.

This plan would choke the economy!

So... let's go off the cliff, which will choke the economy!

[Direckshun]

For the record, TJ, going off the cliff gives you more revenue and less cuts than what I've suggested.

[Taco John]

Originally Posted by Direckshun

This plan would choke the economy!

So... let's go off the cliff, which will choke the economy!

Here's what the CBO says about the fiscal cliff:

Substantial changes to tax and spending policies are scheduled to take effect in January 2013, significantly reducing the federal budget deficit. According to CBO’s projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of 2012 to the fourth quarter of 2013)—reflecting a decline in the first half of the year and renewed growth at a modest pace later in the year. That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013. After next year, by the agency’s estimates, economic growth will pick up, and the labor market will strengthen, returning output to its potential level (reflecting a high rate of use of labor and capital) and shrinking the unemployment rate to 5.5 percent by 2018.

Output would be greater and unemployment lower in the next few years if some or all of the fiscal tightening scheduled under current law—sometimes called the fiscal cliff—was removed. However, CBO expects that even if all of the fiscal tightening was eliminated, the economy would remain below its potential and the unemployment rate would remain higher than usual for some time. Moreover, if the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.

http://www.cbo.gov/publication/43694