Wednesday, November 10, 2010

Tough Medicine for Cutting the Deficit

In my most recent post, I discussed the Federal budget deficit and the tough choices that would be necessary to curb it.  It looks like that is exactly what a bipartisan commission is recommending that we do.  Here is a summary of what they say we need to do to reign in our debt:

Reform Social Security:  The plan calls for raising the retirement age, reduce annual benefit increases, and reduce benefits and increase contributions for the rich. 

Reform Medicare:  The plan calls for limiting health care spending on these plans by paying doctors for quality rather than quantity, reducing payments to drug companies that want to participate in Medicare, and increasing cost sharing for participants.

Overhauling the Tax System:  The plan raises additional revenue by increasing the gas tax, eliminating deductions such as the mortage interest deduction, health care insurance deduction, and the child tax credit.  At the same time, it lowers tax rates and simplifies the tax code.

Cut Spending:  The plan cuts the Federal workforce by 10%, freezes salaries for three years, and cuts or eliminates various spending projects.  This includes serious cuts to the defense budget, farm subsidies, and foreign aid.

Overall, I like the plan.  It takes on the heavy hitters (Social Security, Medicare, defense), it eliminates the special interest tax breaks and spending, and it simplifies the tax code to boot.  Most importantly, the plan has drawn boos from both Democrats and Republicans so they must be on the right track!

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