It is said that Americans want the government to cut spending while also wanting the government to spend more for them. We will now see how serious the demands to cut the deficit are.
The bipartisan commission appointed by the president to suggest how to trim government spending and get the budget into balance is working on the problem. The two chairmen have released a report on their suggestions. (This is not the final report of the commission.) The two have come up with a plan to save $4 trillion through 2020. It cuts the military, eliminates earmarks, drops federal subsidies for student loans, cuts Medicare, freezes federal salaries, cuts farm subsidies, and eliminates the option to draw social security until you are 68. Supposedly, there is something in the proposal to anger everybody.
It will also raise some taxes. It includes an intriguing reform of the income tax:
The proposed simplification of the tax code would repeal or modify a number of popular tax breaks — including the deductibility of mortgage interest payments — so that income tax rates could be reduced across the board. Under the plan, individual income tax rates would decline to as low as 8 percent on the lowest income bracket (now 10 percent) and to 23 percent on the highest bracket (now 35 percent). The corporate tax rate, now 35 percent, would also be reduced, to as low as 26 percent.
Even after reducing the rates, the overhaul of the tax code would still yield additional revenue to reduce annual deficits — a projected $80 billion in 2015.
Would you be willing to bite this bullet?