Wednesday, December 7, 2011


A friend gave me an editorial criticizing President Obama for failing to encourage Congress to vote on the Simpson Bowles’ (The national Commission on fiscal responsibility and Reform) recommendations to reduce the deficit.

The plan was never voted on because there were very few Democrats or Republicans who would support it. The democrats hated the proposed changes in Medicare and the Republicans hated it because it proposed, through tax reform,  large increases in government revenue.

The Commission recommended a $500 deductible plus a 50% contribution to the next $5000 of medical expense incurred by seniors. Voting for that would have been tantamount to submitting your resignation.

It also recommended, in the guise of tax reform, a substantial increase in taxes including a 15% tax on gasoline. Can’t picture there being much Tea Party support for that one.

It would have been wonderful to hear honest debate on the issues raised but in this political climate everyone is afraid to offer a compromise for fear of it being used in an attack ad in the next election.

If a Republican suggests that he will support tax increases if a Democrat will support spending cuts... he will face charges in the next election that he favors tax increases. If a Democrat were to vote for the changes in Medicare he would have been blasted for destroying Medicare.
Look at what happened to Democrats who voted for health care reform although the changes to Medicare made by that bill were minimal!

I believe that the President's big mistake was not allowing the Bush Tax Cuts to expire unless Congress acted to get our deficit under control. When he agreed to compromise he lost the battle but perhaps not the war.

It is possible that he didn’t want the tax cuts to expire while our economy was so fragile and in fact through that compromise and the recent one resulting from the Republicans blocking the increase in the debt ceiling, simply postponed the day of reckoning.

A year from now - 1.2 trillion dollars, 120 billion a year, will be automatically cut from the budget, half of it from defense. At the same time the Bush tax cuts will expire adding 300 billion a year in revenue. Together they will reduce the deficit by over 4 trillion dollars in 10 years ,enough to erase the deficit, without Congress doing anything (something they are really good at) . Neither side wants this and the result might be honest, real and hopefully public negotiations which may result in tax reform and budget cuts similar to those recommended by Simpson Bowles.

All of us should read the Commission’s plan. It is short and both easy to read and to understand. While it is easy to find fault with particular recommendations, it is hard to fault the plan in its entirety. The end result, a balanced budget, is of course what is really important.

Anyone wishing to review their recommendations can access them by clicking on this link:

A number of other plans have been offered. The Paul Ryan Plan can be found at

are two of them.

The Commission did not try to dictate specific spending cuts to specific programs (although it does make a number of suggestions) It attempted to provide a broad outline to follow in order to achieve both reductions in spending and increases in revenue.

Unfortunately it was completed after the 2010 elections and flew in the face of the newly elected Tea party candidates pledge to not increase taxes. The election also made it apparent that if you wanted to win a Republican primary, revenue enhancement was off the table.

The plan reduced tax rates, but by eliminating what it calls tax expenditures (deduction and subsidies that favor the rich and special interests) it increased revenue. It decreases everyone’s after tax income but the poorest 20% by only .025% and the richest 20% by 3.4%. When your income is over a million dollars 3.4% is a lot of dollars.

There were a lot of other suggestions for revenue enhancement that should have pleased democrats but apparently by not enough. A 15 % increase in the tax on gasoline (the proceeds dedicated to much needed highway construction and maintenance), a reduction in the corporate tax rate, eliminating mortgage interest as a deduction except on your personal residence, an increase in the capital gains rate and the tax rate on dividends to the rate your other income was taxed at and other changes which all seemed reasonable to me.

It says there are 75 special tax breaks for different corporations and other special interests. It proposes eliminating almost all of them. I saw that as a make-work project for lobbyists. It took them 25 years to convince Congress to stick these breaks in the tax code. If the Commission's report was approved the lobbyists could go back to full employment trying to obtain those exemptions again!

The reductions in discretionary expenditures were divided between security and non security spending with both areas suffering cuts. These recommendations were made in general terms leaving it to Congress and the Administration to decide where these cuts could be made while causing minimum damage. Again all of these recommendations seemed reasonable.

The recommendations were also sensitive to our present economic problems. Most provisions did not take affect until 2014 or 2015.

The plan contains much to love but you could make a multitude of changes and still end up with the same result. We are never going to create a system which satisfies everyone. We need to compromise. If we are going to save the country we need to elect people who are ready to do that. Centrists who are willing to engage in calm debate... not slaves to the Tea Party nor to the far left.

The polls show that 77% of Americans understand that tax increases are required.

The other 23% listen to Rush Limbaugh and Fox news. Unfortunately they are also the Tea Party and are choosing our Republican Congresspeople.

1 comment:

  1. Simpson Bowles was a good plan, or at least a good start. Unfortunately, in today's political climate, no compromises can be made as you wisely point out. Good analysis!