General of Darkness
17th November 2010, 06:45 AM
Let's not reduce insane spending, let's kill any potential of growth. And yes she's a chosen one.
http://www.bloomberg.com/news/2010-11-17/rivlin-proposes-6-5-national-sales-tax-as-part-of-deficit-reduction-plan.html
Rivlin Proposes 6.5% National Sales Tax as Part of Deficit-Reduction Plan
By Heidi Przybyla - Nov 17, 2010 5:27 AM PT
Former Federal Reserve Vice Chairwoman Alice Rivlin
Former Federal Reserve vice chairwoman and Democrat Alice Rivlin. Photographer: Brendan Hoffman/Bloomberg
Alice Rivlin, a member of President Barack Obama’s deficit-reduction commission, is trying to stir a debate over imposing a national sales tax to reduce the deficit.
Rivlin, as part of a separate 19-member group sponsored by the Bipartisan Policy Center in Washington, offered a plan for a 6.5 percent national debt-reduction sales tax. Her recommendation comes as the president’s panel prepares a Dec. 1 report of options for Congress to trim the national debt.
Rivlin, a former Federal Reserve vice chairwoman and Democrat, and the co-chairman of the policy center group, former New Mexico Republican Senator Pete Domenici, are offering a more aggressive approach to tax increases and cuts to Medicare.
“It’s very difficult, and they want to go further,” said Alan Simpson, a Republican former Wyoming senator who is co- chairman of the president’s commission.
Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities in Washington, said the Rivlin group may be “somewhat more realistic” about how much revenue is needed to close the deficit.
The more aggressive plan may help the presidential panel sell unpopular remedies by painting an even starker picture of the measures needed to tame the debt.
The presidential panel’s co-chairmen, Simpson and Erskine Bowles, former President Bill Clinton’s chief of staff, drew criticism Nov. 10 when they proposed their $3.8 trillion report.
Simpson suggested it isn’t likely his group will take up the sales tax recommendation.
“There’s no need to get into it about their plan versus our plan,” he said. “We’ve pissed enough people off in America to last forever. We don’t need any more people.”
Eliminating Deductions
Similar to the Bowles-Simpson proposals, the Rivlin plan would lower income tax rates while eliminating most deductions and credits. It would replace the home mortgage and charitable contribution deductions with 15 percent refundable credits.
The plan also makes $756 billion in cuts to health care through 2020, including raising Medicare premiums from 25 percent to 35 percent over five years, and starts a premium support program to limit growth in federal spending on the health-care program for the elderly.
It also attempts to spark economic growth with a one-year Social Security payroll tax holiday designed to create 2.5 million jobs.
“It is a fundamental difference” with the Bowles-Simpson plan, said Steve Bell, a scholar at the Bipartisan Policy Center. “They assume that this deficit reduction plan in and of itself is sufficient. We don’t.”
Payroll Tax Cap
On Social Security, instead of raising the retirement age, as in the Bowles-Simpson plan, the Rivlin group proposes a gradual increase in the amount of wages subject to payroll taxes, currently $106,800, over the next 38 years to cover 90 percent of all wages. It would also trim the annual cost-of- living adjustments and reduce the growth in benefits for the top 25 percent of beneficiaries.
The Rivlin-Domenici plan seeks to illustrate why a combination of spending cuts and tax increases is the only way to stabilize the debt by 2020.
Targeting domestic discretionary spending cuts alone would require eliminating almost everything from law enforcement and border security to education and food and drug inspection, according to the policy center.
The nation also cannot grow its way out of the deficit, the group’s report says. Just to stabilize the debt at 60 percent of gross domestic product, the economy would have to grow at a sustained rate of more than 6 percent a year for at least the next 10 years, it says. The economy hasn’t grown by more than 4.4 percent in any decade since World War II.
Finally, the problem also can’t be solved simply by raising taxes on wealthy Americans, the report says. Reducing deficits to manageable levels by the end of the decade would require raising rates on the top two income brackets to 86 percent and 91 percent, the report says.
To contact the reporter on this story: Heidi Przybyla in Washington at bfaler@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net
http://www.bloomberg.com/news/2010-11-17/rivlin-proposes-6-5-national-sales-tax-as-part-of-deficit-reduction-plan.html
Rivlin Proposes 6.5% National Sales Tax as Part of Deficit-Reduction Plan
By Heidi Przybyla - Nov 17, 2010 5:27 AM PT
Former Federal Reserve Vice Chairwoman Alice Rivlin
Former Federal Reserve vice chairwoman and Democrat Alice Rivlin. Photographer: Brendan Hoffman/Bloomberg
Alice Rivlin, a member of President Barack Obama’s deficit-reduction commission, is trying to stir a debate over imposing a national sales tax to reduce the deficit.
Rivlin, as part of a separate 19-member group sponsored by the Bipartisan Policy Center in Washington, offered a plan for a 6.5 percent national debt-reduction sales tax. Her recommendation comes as the president’s panel prepares a Dec. 1 report of options for Congress to trim the national debt.
Rivlin, a former Federal Reserve vice chairwoman and Democrat, and the co-chairman of the policy center group, former New Mexico Republican Senator Pete Domenici, are offering a more aggressive approach to tax increases and cuts to Medicare.
“It’s very difficult, and they want to go further,” said Alan Simpson, a Republican former Wyoming senator who is co- chairman of the president’s commission.
Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities in Washington, said the Rivlin group may be “somewhat more realistic” about how much revenue is needed to close the deficit.
The more aggressive plan may help the presidential panel sell unpopular remedies by painting an even starker picture of the measures needed to tame the debt.
The presidential panel’s co-chairmen, Simpson and Erskine Bowles, former President Bill Clinton’s chief of staff, drew criticism Nov. 10 when they proposed their $3.8 trillion report.
Simpson suggested it isn’t likely his group will take up the sales tax recommendation.
“There’s no need to get into it about their plan versus our plan,” he said. “We’ve pissed enough people off in America to last forever. We don’t need any more people.”
Eliminating Deductions
Similar to the Bowles-Simpson proposals, the Rivlin plan would lower income tax rates while eliminating most deductions and credits. It would replace the home mortgage and charitable contribution deductions with 15 percent refundable credits.
The plan also makes $756 billion in cuts to health care through 2020, including raising Medicare premiums from 25 percent to 35 percent over five years, and starts a premium support program to limit growth in federal spending on the health-care program for the elderly.
It also attempts to spark economic growth with a one-year Social Security payroll tax holiday designed to create 2.5 million jobs.
“It is a fundamental difference” with the Bowles-Simpson plan, said Steve Bell, a scholar at the Bipartisan Policy Center. “They assume that this deficit reduction plan in and of itself is sufficient. We don’t.”
Payroll Tax Cap
On Social Security, instead of raising the retirement age, as in the Bowles-Simpson plan, the Rivlin group proposes a gradual increase in the amount of wages subject to payroll taxes, currently $106,800, over the next 38 years to cover 90 percent of all wages. It would also trim the annual cost-of- living adjustments and reduce the growth in benefits for the top 25 percent of beneficiaries.
The Rivlin-Domenici plan seeks to illustrate why a combination of spending cuts and tax increases is the only way to stabilize the debt by 2020.
Targeting domestic discretionary spending cuts alone would require eliminating almost everything from law enforcement and border security to education and food and drug inspection, according to the policy center.
The nation also cannot grow its way out of the deficit, the group’s report says. Just to stabilize the debt at 60 percent of gross domestic product, the economy would have to grow at a sustained rate of more than 6 percent a year for at least the next 10 years, it says. The economy hasn’t grown by more than 4.4 percent in any decade since World War II.
Finally, the problem also can’t be solved simply by raising taxes on wealthy Americans, the report says. Reducing deficits to manageable levels by the end of the decade would require raising rates on the top two income brackets to 86 percent and 91 percent, the report says.
To contact the reporter on this story: Heidi Przybyla in Washington at bfaler@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net