6 Hidden Gems in the Deficit Commission Report

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debtBy John Merline

The title of the bipartisan deficit commission’s final report is “The Moment of Truth.” And it’s meant to set the stakes for what must be done to cope with the nation’s gargantuan and growing pile of debt.

“We cannot play games or put off hard choices any longer,” says the preamble. “Our challenge is clear and inescapable: America cannot be great if we go broke.”

But while everyone will no doubt focus on the plan’s seemingly controversial proposals, what’s likely to get overlooked are several truths the report reveals about the federal government, health reform, the tax code and more.

Here are a half dozen:

1) The federal government is horribly managed. The commission report cites just a few examples, but they are doozies. Did you know, for example, that there are 44 separate federal job-training programs across nine federal agencies? Or that there are 20 different programs all studying invasive species? And 105 programs meant to encourage participation in science, technology and math? Or that few of them can show they are achieving their goals? There are thousands of examples like this, according to the report.

2) Health reform’s cost savings apparently were bogus. Remember how Democrats boasted that health reform would cut the budget deficit by $170 billion over the next decade and far more after that? The deficit commission must not have gotten that memo. It says health spending projections under the new law “count on large phantom savings” and the reform law’s new long-term care program that the report calls “unsustainable.” As a result, Congress will still need to enact “a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly.”

3) Millions of workers don’t pay into Social Security. One of the reform ideas is to require newly hired state and local workers to start paying into Social Security. Wait? Isn’t Social Security mandatory? Turns out, almost 10 percent of workers don’t pay in, since “a small share of states and localities exclude their employees from Social Security” and instead operate their own retirement systems. (Given Social Security’s dire financial forecast, one wonders how those workers would feel about that reform.)

4) The tax code is a hopeless, loophole-riddled mess. How else can you explain the fact that, according to the report, you can lower the top marginal rate by 20 percent and still collect an additional $112,533 from the richest 1 percent of taxpayers, simply by closing loopholes?

5) Obama is a big spender. Although President Barack Obama has talked about fiscal discipline — and set up this deficit commission — his own budget plan would spend $350 billion more on so-called discretionary programs over the next decade than if the government were just left on autopilot, according to the report.

6) It’s actually not that hard to cut the deficit. The report talks loudly about the “painful” choices ahead and how there’s “no easy way out.” But what the report really shows is that a comprehensive package of relatively modest and reasonable policy changes can bring deficits under control.

The tax reform plan, for example, is modeled on the reforms enacted under President Ronald Reagan, which also lowered and simplified income tax rates in exchange for cutting back on a thicket of tax loopholes. The Social Security reforms are all unexceptional and slowly phased in. The cuts in discretionary spending mainly just strip out the massive spending increases enacted over the past couple of years. Indeed, probably the toughest medicine in the plan is a 15 cent per gallon hike in the federal gas tax by 2015 — which would cost an average driver about $100 a year.

Read More – http://www.aolnews.com/opinion/article/opinion-6-hidden-gems-in-the-deficit-commission-report/19741541

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