Presentation on theme: "United States Tax Code Revisited Simpson-Bowles Feb. 18, 2010, President Obama created the bipartisan National Commission on Fiscal Responsibility and."— Presentation transcript:
United States Tax Code Revisited Simpson-Bowles Feb. 18, 2010, President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to address our nation's fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015
United States Tax Code Revisited Simpson-Bowles In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government. The Commission will meet as a whole once a month while Congress is in session. The Commission will vote on a final report containing a set of recommendations to achieve its mission no later than December 1, 2010. The final report will require the approval of at least 14 of the Commission's 18 members.
TTYN: In light of what you now know about Simpson – Bowles: what do you think? Good idea? Do you believe it to an effective method to address the country’s economic woes? The Proposal Nov. 10, 2010 It’s big. It’s complicated. The highlights Six-part plan to put our nation back on a path to fiscal health, promote economic growth, and protect the most vulnerable among us. Taken as a whole, the plan will: Achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation’s history
The Proposal Reduce the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding President’s goal of primary balance (about 3% of GDP).2 Sharply reduce tax rates, abolish the AMT, and cut backdoor spending in the tax code. Cap revenue at 21% of GDP and get spending below 22% and eventually to 21%. Ensure lasting Social Security solvency, prevent the projected 22% cuts to come in 2037, reduce elderly poverty, and distribute the burden fairly. Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035.
The plan has six major components: 1) Discretionary Spending Cuts: including significant cuts in both security and non-security spending by cutting low-priority programs and streamlining government operations. 2) Comprehensive Tax Reform: Sharply reduce rates, broaden the base, simplify the tax code, and reduce the deficit by reducing the many “tax expenditures 3) Health Care Cost Containment: Replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize.
4) Mandatory Savings: Cut agriculture subsidies and modernize military and civil service retirement systems, while reforming student loan programs and putting the Pension Benefit Guarantee Corporation on a sustainable path. 5) Social Security Reforms to Ensure Long-Term Solvency and Reduce Poverty: Ensure sustainable solvency for the next 75 years while reducing poverty among seniors. Reform Social Security for its own sake, and not for deficit reduction. 6) Process Changes: Reform the budget process to ensure the debt remains on a stable path, spending stays under control, inflation is measured accurately, and taxpayer dollars go where they belong.
TTYN: Again, i n light of what you now know about Simpson – Bowles: what do you think? Good idea? Do you believe it to an effective method to address the country’s economic woes? Partisan Politics At Its Best Analyzing the plan, It called for: Deep cuts in domestic and military spending starting in 2012. Overhaul the tax code Eliminating or reducing the $1 trillion a year in popular tax breaks for individuals and corporations and using the revenues mostly to slash income tax rates but also to reduce deficits. Make Social Security solvent for 75 years, Raise payroll taxes for the affluent and reduce future benefits, including by slowly raising the retirement age for full benefits to 69 from 67 by 2075.
Partisan Politics At Its Best Both Republicans and Democrats bash the proposal…. WHY? Tax increases for upper-income Americans and the scale of proposed reductions in future health care and Social Security programs Republicans opposed to it, suggested that it failed to cut spending deeply enough and did not include a repeal of the Democratic health care law. TTYN: What’s Next? How should the President and Congress respond to the failure of Simpson-Bowles?