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.

[Direckshun]

Originally Posted by Taco John

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

My favorite part was the very next sentence.

[Taco John]

Originally Posted by Direckshun

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

Yes, I know. I have my reasons. My goal is to shrink government, not fund it.

[Taco John]

Originally Posted by Direckshun

My favorite part was the very next sentence.

And what about the next one - and the one after that?

Short term pain, long term gain.

[Direckshun]

Originally Posted by Taco John

And what about the next one - and the one after that?

Short term pain, long term gain.

That's, like, the official tagline of the Direckshun Grand Bargain.

[Taco John]

Originally Posted by Direckshun

That's, like, the official tagline of the Direckshun Grand Bargain.

I suppose I don't see it. I see a proposal that would choke housing and job recovery both short and long term.

[WoodDraw]

I don't have near the expertise to say yes or no.

I support raising the gas tax, but that has to be slowly phased in over a longer period of time.

I worry about the mortgage deduction thing, especially because it encourages urban flight and sprawl under what you proposed.

I'd like to decrease military spending, and expand the tax base.

[J Diddy]

Cut the taxes for the rich, close the loop holes, add a 5% federal internet sales tax add a sales tax of 5% federal sales tax until the debt gets cleared up.

[A Salt Weapon]

Originally Posted by J Diddy

Cut the taxes for the rich, close the loop holes, add a 5% federal internet sales tax add a sales tax of 5% federal sales tax until the debt gets cleared up.

If you could enter realville for a moment you might realize it's not a revenue issue we have as a country it's a spending problem.

Raising taxes without cutting spending will not clear the debt, no matter how long it's in effect.
Posted via Mobile Device

[J Diddy]

Originally Posted by A Salt Weapon

If you could enter realville for a moment you might realize it's not a revenue issue we have as a country it's a spending problem.

Raising taxes without cutting spending will not clear the debt, no matter how long it's in effect.
Posted via Mobile Device

Please talk to me about realville Mr. close down the government except for the military?

that being said, I agree. That is why I also advocate going over the fiscal cliff

[A Salt Weapon]

Originally Posted by J Diddy

Please talk to me about realville Mr. close down the government except for the military?

Good point.
Posted via Mobile Device

[Direckshun]

13 votes in the poll, plus disagreements with the plan from J Diddy and Woodraw.

Yay: 1
Nay: 15

[Trivers]

Originally Posted by Direckshun

13 votes in the poll, plus disagreements with the plan from J Diddy and Woodraw.

Yay: 1
Nay: 15

See how hard it is to reach an agreement?

Everyone else wants the other side to pay for their standard of living. And they vote in senators and reps who only care about staying in office.

All the talking heads this AM on TV were blaming the other side.

[patteeu]

Add me to the "nays". Your defense cuts are way too deep. Your tax increases on investment income are way too big and your top marginal tax rate is way too high. It's not clear to me whether you've included much in the way of preventing health care cost increases (beyond tort reform), but that's essential for medicare reform.

[FD]

Originally Posted by Direckshun

13 votes in the poll, plus disagreements with the plan from J Diddy and Woodraw.

Yay: 1
Nay: 15

Nobody is going to vote yes on an internet board. As is clear from the debates on here, there is no incentive to ever give an inch.

FWIW, I voted no because there were too many cuts to discretionary spending, not enough cuts to Medicare, and because it raised taxes too much on capital gains and dividends. Capital should be taxed less not more.

[Direckshun]

18 Nays, 1 Yay