Highlights of the Fiscal Commission Plan
- Nearly $4 trillion in deficit reduction by the end of the decade, more than any effort in history.
- Reduces the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding President’s goal of primary balance (about 3% of GDP).
- Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2023 and 40% by 2035.
- Balances the primary budget beginning in 2014, brings down the debt as a share of the economy thereafter, and balances the budget completely by 2035.
- Takes a balanced approach to deficit reduction, with a two to one ratio of spending reductions to revenue increases (three to one if reductions in spending on interest are counted).
- Applies discipline to all parts of the budget and goes after every sacred cow, while protecting the most vulnerable and prioritizing high value investments in education, infrastructure, and Research and Development.
- Recommends a tax reform framework which would help rid the tax code of the over $1 trillion in spending in form of so called “tax expenditures,” while dramatically bringing down rates.
- Caps revenue at 21% of GDP and gets spending below 22% and eventually to 21%. Ensures that any new revenues go to debt reduction, not new spending
- Ensures lasting Social Security solvency through progressive changes to benefits and revenues, preventing the projected 22% across the board benefit cuts expected to come in 2037 and reducing elderly poverty.
- Discretionary Spending Cuts: Imposes tough discretionary spending caps to force budget discipline. Recommends significant cuts in both security and non-security spending by cutting low-priority programs and streamlining government operations. Offers more than $50 billion in immediate cuts to lead by example, and a total of $200 billion per year in illustrative savings.
- Comprehensive Tax Reform: Sharply reduces rates, broadens the base, simplifies the tax code, and reduces the deficit by reducing the many “tax expenditures” – another name for spending through the tax code. Reforms corporate taxes to make America more competitive, and cap revenue to avoid excessive taxation.
- Health Care Cost Containment: Includes a strict budget of GDP + 1% for health spending along with specific medium-term reductions. Replaces the phantom savings from scheduled Medicare reimbursement cuts that will never materialize and those from a new long-term care program that is unsustainable with real, common-sense reforms to physician payments, rationalizing cost-sharing requirements, malpractice reform, acceleration of successful payment reforms, increased prescription drug discounts, reductions in government-subsidized medical education, and other sources.
- Mandatory Savings: Cuts agriculture subsidies and modernizes military and civil service retirement systems, while reforming student loan programs and putting the Pension Benefit Guarantee Corporation on a sustainable path.
- Social Security Reforms to Ensure Long-Term Solvency and Reduce Poverty: Ensures sustainable solvency for the next 75 years while reducing poverty among seniors. Reforms Social Security for its own sake, not for deficit reduction.
- Process Changes: Reforms the budget process to ensure the debt remains on a stable path, spending stays under control, inflation is measured accurately, and taxpayer dollars go where they belong.
(Note: Savings totals and deficit and debt levels listed above are quoted as they appeared in the Fiscal Commission report, published December 2010.)
The Fiscal Commission plan would save nearly $4 trillion over the next decade – more than any effort in history.