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Debt Commission bureaucracy

In February 2010 after Congress failed to agree on actually reversing the debt and continued their unchecked spending, Obama filed an executive order which can and will have more legislative might, overpowering the Legislative branch that much more. Obama was able to get 2 very long time politicians, one from each side of the aisle calling it a “bipartisan” panel, yet many of those selected are either hard right or hard left meaning this is just more party bickering. The structure of the panel requires 14 of 18 members to support the draft for it to move to Congress for consideration.

In the past 7 months since convening, they released a 50 page report, stating “Our economy will not grow and our country will not be able to compete without a plan to get this crushing debt burden off our back.”  The document makes five basic recommendations: First, to “enact tough discretionary spending caps” and find $200 billion in savings by 2015. Second: tax reform “that dramatically reduces rates, simplifies the code, broadens the base and reduces the deficit.” The third step addresses reforms of the health system. Fourth: mandatory savings from farm subsidies and civilian and military retirement costs. And fifth: reforms to Social Security to ensure its solvency “while reducing poverty among seniors.”

Remember, this is just an early draft (although after 7 months it should be much farther along, but that is bureaucracy and red tape for you.

Breaking these down one by one:

  1. “enact tough discretionary spending caps” and find $200 billion in savings by 2015.
  2. tax reform “that dramatically reduces rates, simplifies the code, broadens the base and reduces the deficit.”
  3. reforms of the health system
  4. mandatory savings from farm subsidies and civilian and military retirement costs.
  5. reforms to Social Security to ensure its solvency “while reducing poverty among seniors.”

While it all sounds good in theory, in reality, getting the hard left liberals to agree to any of this without expanding government programs will be impossible, and getting the hard right republicans to agree without massive tax cuts and reduced spending will also be impossible. This is why they released this report as a sort of “goals” to shoot for. They say these steps could reduce the deficit to 2.2% of gross domestic product by 2015 (yet it went from 1.1% in 2006 under Republican lead to 12% today under Democrat lead), and achieve $4 trillion in deficit reduction by 2020 ($4 Trillion from $14 trillion is still $10 trillion, MUCH higher than it should be).

1. Spending caps would include freezing the military men and women’s basic pay, basic allowance for housing, and basic allowance for subsistence, as well as the tax advantage of those two tax-free allowances. “A three-year freeze at 2011 levels for these compensation categories would save the federal government $7.6 billion in compensation and tax expenditures,” as well as another $1.6 billion in future retirement pay, for a total of $9.2 billion in savings in 2015.” 9.2 billion is still only 0.1% of the deficit.

2. Little is known about the tax reform related recommendations, especially since it is subject to change dramatically now with the split Congress after the mid term elections.

3 and 4. One recommendation calls for the military related health care: adjusting Tricare enrollment fees, co-pays and deductibles, would raise premiums and co-pays by smaller, unspecified amounts and would squeeze most of its cost savings from a new requirement that private-sector employers reimburse the government for the employer share of health care costs for working-age retirees who use Tricare instead of their employer-provided health plan. “To reduce higher-than-average usage of health care by families of service members, the option would also raise co-pays for office visits from their current low levels closer to national averages,” the report said.

Another recommendation would increase out-of-pocket costs for veterans in Priority Group 5 who are enrolled in the Veterans Affairs Department health care system. That category is for veterans who do not have service-connected disabilities and whose income is below a VA-defined threshold. Those patients now pay no fees for inpatient or outpatient medical care.

4. Little is said about the farm subsidies, but this is likely a liberal agenda aimed at extending more money to farm subsidies which would allow the continued used of corn and other farm products for Ethanol and alternative “clean” fuels.

5. Little is said about the Social Security reforms but a few ideas suggests raising the retirement age, altering the formula for cost-of-living increases, and raising the payroll tax threshold. The normal retirement age would rise to 68 by 2050, and 69 by 2075.

Personally, I believe they need to completely restructure the Social Security system. Social Security must be restructured so it is like a bank, the money you pay goes into a secured bank account that only you can touch in the events of disability or retirement. Otherwise NO ONE but you can touch that money and it is removed from being used for the government expense general fund and wasted by the government. After 10 years of paying into the system, you can borrow against it up to 5%, but with interest that is all paid back to the bank itself: they need to pay the administrative fees and reduce the taxes we pay, so those that borrow essentially pay for the service in short term, although everyone pays in the long term. So if you borrow, you actually benefit yourself by reducing the taxes paid.

This is VERY unlikely because both sides know that if we take away their access to that massive hoard of cash, all of their wasteful spending and earmarks would go unfunded, and would likely double the deficit since they do not have a constant stream of extra cash flowing in.

The commission consists of 18 total members, including 12 sitting lawmakers. The leaders of this commission appointed by Obama are co-chairs Erskine Bowles, a Democrat who was White House chief of staff for President Clinton, and Alan Simpson, a former Republican senator from Wyoming. He also named three Democrats: Alice Rivlin, a former vice chair of the Federal Reserve who also served as director of the Congressional Budget Office and the White House budget office; Andrew Stern, retiring president of the 2.2 million-member Service Employees International Union; and Ann Fudge, former head of Young & Rubicam Brands, a global marketing and communications company. He also named one Republican: David Cote, the CEO and chairman of Honeywell, a technology and manufacturing company.

Here are some other members:

Senate Republicans chose Sens. Judd Gregg (NH), Mike Crapo (ID) and Tom Coburn (OK) as their representatives. The three House GOP members are Reps. Paul Ryan (WI), Dave Camp (MI) and Jeb Hensarling (TX).

Senate majority leader Harry Reid and House Speaker Nancy Pelosi each picked three congressional Democrats: Sen. Max Baucus, D-Mont., who chairs the Senate Finance Committee; and Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee; Sen. Dick Durbin, D-Ill., the No. 2 Democrat in the Senate; Rep. Xavier Becerra, D-Calif., a member of the Budget and Ways and Means committees; and Rep. Jan Schakowsky, D-Ill., a member of the Energy and Commerce Committee; and Rep. John M. Spratt Jr., D-S.C., chairman of the House Budget Committee.

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