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Thread: Debt Plan Would Cut Social Security, Medicare

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    Elite Member Mr. Authority's Avatar
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    Exclamation Debt Plan Would Cut Social Security, Medicare

    Source: Bloomberg

    Nov. 10 (Bloomberg) -- A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would trim Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.

    The plan would throw out hundreds of tax breaks for items such as capital gains and child care. It would raise the gas tax, slash defense spending and bring down health-care costs by clamping down on medical malpractice suits. The Social Security retirement age would rise to 68 in about 2050 and 69 in about 2075.

    “This country’s out of money and we better start thinking,” said Erskine Bowles, co-chairman of the panel created by President Barack Obama. Without “tough choices,” Bowles said, “we’re on the most predictable path toward an economic crisis that I can imagine.”

    Bowles, former President Bill Clinton’s chief of staff, and former Senator Alan Simpson, a Wyoming Republican, announced the proposal in Washington today, stressing that it was intended as a starting point for discussion.

    The savings would come between 2012 and 2020. The result would be a deficit totaling about $400 billion or about 2.2 percent of the nation’s gross domestic product in 2015. That would exceed Obama’s goal for the panel of a reduction to 3 percent, from the current 9 percent of GDP.

    White House spokesman Bill Burton said in an e-mail the proposals “are only a step in the process towards coming up with a set of recommendations.” He said Obama wants to give the panel “space to work on it” and wouldn’t comment on the plan.

    Lawmakers Balking

    The chairmen’s plan is already causing some Democrats and Republicans on the 18-member commission to balk. While most economists say some combination of spending cuts and tax increases is necessary, Republicans are wary of tax hikes and Democrats are reluctant to reduce U.S. government benefits.

    “This is not a package that I could support,” Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission before the chairmen released details of their plan. She said any package able to win the necessary 14 votes on the panel would have to look “very different” from the options under discussion.

    House Speaker Nancy Pelosi of California called the plan “simply unacceptable,” saying older Americans “are counting on the bedrock promises of Social Security and Medicare.”

    Boehner Backs Freeze

    House Republican leader John Boehner of Ohio, who will become speaker in January, said before the plan’s release that he supported a freeze on federal hiring and the pay of U.S. government workers.

    None of the proposals would take effect next year to avoid disrupting the economic recovery. Under one option, income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent. Currently there are six tax levels ranging from 10 percent to 35 percent. The corporate income-tax rate would be cut to 26 percent from 35 percent.

    Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would cost taxpayers $100 billion a year under the plan. Members of the panel could decide to keep some of the breaks by offering offsetting cuts, Bowles said.

    ‘Harpooned Every Whale’

    John Courson, chief executive officer of the Mortgage Bankers Association in Washington, said eliminating or reducing the mortgage deduction would drive down home values.

    “Of all the times to do it, now is not the time,” he said in an interview.

    Bowles said about three-quarters of the savings would come from spending cuts, with the remainder from tax increases.

    “We have harpooned every whale in the ocean and some of the minnows,” Simpson said. “No one has done this before.”

    The proposal calls for discretionary spending to be cut by $1.4 trillion over 10 years, while mandatory spending -- including Social Security, Medicare and Medicaid -- would be reduced by $733 billion. Taxes would be raised by $751 billion, including a 15-cent increase in the gas tax starting in 2013.

    Tax increases would begin in 2012, when they would total $69 billion. They would ramp up to $372 billion in 2015, $588 billion in 2018 and $761 billion in 2020.

    Farm subsidies would be cut by $3 billion a year. The proposal would also attempt to slow the growth of health-care costs by paying doctors participating in the Medicare health program for the elderly less and calling for “comprehensive” legislation to reduce malpractice costs.

    Freezing Federal Salaries

    Discretionary spending cuts in the plan include reducing congressional and White House budgets by 15 percent, freezing federal salaries and cutting the federal workforce by 10 percent. The discretionary reductions would be split equally between defense and domestic programs, Bowles said.

    The plan spells out $100 billion in defense cuts, including freezing Defense Department salaries and noncombat military pay at 2011 levels for three years, cutting overseas bases by one-third and doubling proposed cuts in defense contracting.


    The government is projected to run $8 trillion in deficits over the next 10 years, which would push the national debt up to more than $20 trillion.

    The panel’s goals drew praise from Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, a Washington-based group that advocates balanced budgets. The plan “would fix our fiscal problems and truly reflects a balanced compromise across party lines,” she said.

    ‘Drop Dead’

    Some of the plan would be painful, she said, “but we must be mindful of the consequences if we fail to act.”

    AFL-CIO President Richard Trumka said the panel chairmen “just told working Americans to ‘drop dead.’” In an e-mailed statement, Trumka said, “The very people who want to slash Social Security and Medicare spent this week clamoring for more unpaid Bush tax cuts for millionaires.”

    John Rother, executive vice president for policy at the senior citizens’ group AARP, said his group would oppose the plan because it would be “dramatically lowering benefits over time” in Social Security and Medicare.

    Simpson said the plan was designed to give members of the panel something to “chew on” for further discussions. The panel will meet again next week, said Senate Budget Committee Kent Conrad of North Dakota.

    “This is Al’s and my proposal, nobody else’s,” Bowles said. “The president hasn’t seen this proposal.”

    ‘Witness Protection’

    Some members of Obama’s financial team have seen the plan and they liked some things and not others, he said. Asked how interest groups would react, Bowles joked, “we’re going to be in the witness-protection program.”

    Senator Dick Durbin, an Illinois Democrat, called the plan a “starting point for the conversation.”

    “We’re not going to have an up-or-down vote on this,” said Durbin. “There are proposals in there that are painful. I told them I said there are things in here which inspire me and other things which I hate like the devil hates holy water. I’m not going to vote for those things.”

    Some Republicans also expressed skepticism that the report would survive in its current form. New Hampshire Senator Judd Gregg called the plan a “starting point.” Representative Jeb Hensarling of Texas said “some of it I like, some of it disturbs me.”
    Debt Plan Would Cut Taxes, Social Security, Medicare (Update3) - Bloomberg.com

    Even if this plan includes defense budget reductions (yeah right), it's unacceptable to cut SS and Medicare. It's a kick in the stomach to all of our seniors and anyone dependent on these programs. Dear God why is Obama allowing this to even be proposed!?

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    Elite Member Grimmlok's Avatar
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    .. Obama was the one who set up the commission and hand picked SS slashers and Deficit nuts! It's called "The Catfood Commission" because seniors will be forced to live on catfood if it goes through.

    SS isn't broke anyway, that's such a fucking lie. It doesn't add to the deficit either. That part is conveniently ignored.
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    Elite Member Mr. Authority's Avatar
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    Pretty much. the people that want to cut SS (which doesn't affect the budget) are probably just ableists that want the seniors to die off. It makes me sick.

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    Elite Member Mel1973's Avatar
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    Social Security needs a rehaul - and NOT because of our senior citizens. All those motherfuckers out there under 30 who fake a fucking disorder to get benefits so they can get a crazy check need to be reevaluated. They need to crack down on disability. There could be some work done on SS but NONE that should affect our seniors!
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    All they need to do to get more $ for social security is to raise the cap. It's currently $106K. So SS taxes are collected after that point. I suppose that would be OK if the rich never filed for their social security and medicare, but they DO. Greedy bastards!

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    Elite Member louiswinthorpe111's Avatar
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    I do think that Medicare and SS need an overhaul, and I do think cuts would have to be made to some respect because the govt just isn't going to be able to handle all the baby boomers teetering on retirement.

    The mortgage interest deduction will never fly. That would completely stop any real estate investing whatsoever.
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    Elite Member sluce's Avatar
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    Quote Originally Posted by travelbug View Post
    All they need to do to get more $ for social security is to raise the cap. It's currently $106K. So SS taxes are collected after that point. I suppose that would be OK if the rich never filed for their social security and medicare, but they DO. Greedy bastards!
    Your damned right right they file for the benefits they paid into! That doesn't make them greedy.

    I agree with Mel about all the SS disability payments going to people who are healthy enough to work but are defrauding the system. There are too many attornys advertising to help you get get SS disability so you will never have to work again.
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    Elite Member MontanaMama's Avatar
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    Y'alls is plum nuts. Exactly how long can the US go without making any sacrifices? One of these days one of these fucking Congresses is going to have to make the hard decisions looking towards the future and not just to their next election and soundbite. Do I want to work longer? Pay higher taxes? Generally, no, but it's time to pay the piper for the Washington insanity that's gone on since, well longer than I've been alive.
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    Elite Member Mel1973's Avatar
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    Quote Originally Posted by MontanaMama View Post
    Y'alls is plum nuts. Exactly how long can the US go without making any sacrifices? One of these days one of these fucking Congresses is going to have to make the hard decisions looking towards the future and not just to their next election and soundbite. Do I want to work longer? Pay higher taxes? Generally, no, but it's time to pay the piper for the Washington insanity that's gone on since, well longer than I've been alive.
    Agree. When we put the American people on a budget, we also need to put the sonsofbitches running this country on a budget. Lets take a look at their fucking salaries and their golden fleece fucking retirement plan! Or fire every last ONE of them and start all over and raid their retirement plan. Personally, I want a fucking mutiny!
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    Elite Member MontanaMama's Avatar
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    Quote Originally Posted by Mel1973 View Post
    Agree. When we put the American people on a budget, we also need to put the sonsofbitches running this country on a budget. Lets take a look at their fucking salaries and their golden fleece fucking retirement plan! Or fire every last ONE of them and start all over and raid their retirement plan. Personally, I want a fucking mutiny!
    We agree and I'm just thankful I live a looooong way away from Mel with a gun marching on them sons 'o bitches.
    Last edited by MontanaMama; November 11th, 2010 at 01:55 PM. Reason: I type for shit...typed love when I meant live
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    Quote Originally Posted by sluce View Post
    Your damned right right they file for the benefits they paid into! That doesn't make them greedy.

    I agree with Mel about all the SS disability payments going to people who are healthy enough to work but are defrauding the system. There are too many attornys advertising to help you get get SS disability so you will never have to work again.
    I meant the super rich...like Warren Buffett rich. That extra $2000/month in social security is nothing to them. Yes, technically they have a right to it, but they don't need it. They have more money than they could ever spend anyway. If your SS payment can be reduced by the amount you earn in retirement, why can't it be reduced by the amount of other income you have?

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    Gold Member philbert_wormly's Avatar
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    Social Security needs a rehaul - and NOT because of our senior citizens. All those motherfuckers out there under 30 who fake a fucking disorder to get benefits so they can get a crazy check need to be reevaluated. They need to crack down on disability. There could be some work done on SS but NONE that should affect our seniors!
    Ditto!

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    Elite Member MontanaMama's Avatar
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    Quote Originally Posted by travelbug View Post
    I meant the super rich...like Warren Buffett rich. That extra $2000/month in social security is nothing to them. Yes, technically they have a right to it, but they don't need it. They have more money than they could ever spend anyway. If your SS payment can be reduced by the amount you earn in retirement, why can't it be reduced by the amount of other income you have?
    What would really scare the shit out of people is if you only received in social security what you actually paid in, plus interest.

    The problem with that argument is where is the line?
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    Elite Member sluce's Avatar
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    ^^ Such a great point MM. It's the same with health insurance. People bitch about what they pay in but never really think about what they take out. A good ex is my father and step father. Both paid their premiums for years. Neither ever had health issues or went to the Dr unless they were really sick. then my father has a heart attack and dies at home. His insurance paid nothing after all his years of paying in. Three years later my step father had a heart attack. he was in the hospital for a week then cardiac rehab. The cost was over 300k. Two years after that he suffered another attack and was in the hospital, intensive cardiac care, for 4 days before he died. The cost was well over 400k. He cost the system over 700k with 2 hospitalizations. He never paid that amount into the system.

    It's the same with SS. Some people pay in but die before they ever get to collect. Other pay in very little, or not at all, and still collect as long as they live.
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    Elite Member McJag's Avatar
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    I suggest Congress lower their salaries and cut out lifetime benefits first.
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