Gang of Six deficit plan. Read it here.

SHARE Gang of Six deficit plan. Read it here.

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A BIPARTISAN PLAN TO REDUCE OUR NATION’S DEFICITS

EXECUTIVE SUMMARY

This bipartisan, comprehensive, and balanced plan consistent with the recommendations of the Bowles-Simpson fiscal commission that will:

Slash our nation’s deficits by $3.7 trillion/$3.6 trillion over ten years under CBO’s March

2011 baseline, or $4.65 trillion/$4.5 trillion under the original fiscal commission baseline

(which used the President’s 2011 budget request as the starting point for discretionary

spending).

Stabilize our publicly-held debt by 2014.

Reduce our publicly-held debt to roughly 70% of our economy by 2021.

Impose unprecedented budget enforcement.

A COMPREHENSIVE AND BALANCED PROPOSAL

The plan uses a two-step legislative process: (1) an initial bill that makes immediate cuts; and

(2) a process for a second bill to enact comprehensive reform and put our nation on a stable

fiscal path. The plan would:

Immediately implement aggressive deficit reduction down payment

Cut deficits by $500 billion.

Dramatically cut discretionary spending

Cut nonsecurity and security discretionary spending over 10 years.

Maintain investments that encourage economic growth, strengthen the safety net for those

who truly need it, and preserve a strong national defense.

Carefully strengthen the solvency of our most important entitlement programs

Spend health care dollars more efficiently in order to strengthen Medicare and Medicaid,

while maintaining the basic structure of these critical programs.

Fully pays for SGR (the “doc fix”) over 10 years.

Fundamentally reform our tax code

Reduce marginal income tax rates and abolish the $1.7 trillion Alternative Minimum Tax.

Encourage greater economic growth.

Enhance the competitiveness of American businesses and workers against global

competition.

Reform spending through the tax code to eliminate investment distortions and tax gaming.

Change the debate about taxes in America from rate levels and carve outs to

competitiveness, fairness and growth.

If CBO scored this plan, it would find net tax relief of approximately $1.5 trillion.

Strictly tighten the government’s budget processes

Impose spending caps and security/nonsecurity firewalls.

Sequester accounts at the end of the year to recoup any excessive spending by Congress.

Restrict the use of emergency designations that circumvent the spending caps.

Prevent Congress from exceeding the caps by requiring a stand-alone resolution subject to

a 67-vote threshold, in order to isolate that vote to increase the deficit from any other policy

items.

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Reform Social Security for future generations

Ensure 75-year solvency of Social Security and provide for a decennial review of the

program to ensure it remains solvent.

Reform Social Security on a separate track, isolated from deficit reduction – any savings

from the program must go towards solvency.

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AN AGGRESSIVE PLAN THAT INVOLVES THE WHOLE CONGRESS

The plan would be implemented through an open, aggressive two-step legislative process led

by committees of jurisdiction and involving the American people by:

Enacting a $500 billion down payment that would secure immediate deficit savings, while

establishing a fast track process for the committees in Congress to specify further

savings

Impose statutory discretionary spending caps through 2015.

Implement numerous budget process reforms.

Shift to the chained-CPI (a more accurate measure of inflation) government-wide starting in

2012, along with the following specifications for Social Security: (1) exempt SSI from the

shift for five years, and then phase in the shift over the next five years; and (2) provide a

minimum benefit equal to 125% of the poverty line for five years. (According to CBO, the

shift to chained-CPI would result in the annual adjustment growing, on average, about 0.25

percentage points per year slower than the current CPI.)

Repeal the CLASS Act.

Enact concrete policy changes that lock-in additional savings, including freezing

Congressional pay and selling unused federal property.

Require GAO and the Department of Labor to report to Congress on establishing a more

effective unemployment insurance trigger.

Enacting a comprehensive deficit reduction plan that includes discretionary and

entitlement savings as well as fundamental tax reform

Require committees to report legislation within six months that would deliver real deficit

savings in entitlement programs over 10 years as follows:

Finance would permanently reform or replace the Medicare Sustainable Growth Rate

formula ($298 billion) and fully offset the cost with health savings, would find an

additional $202 billion/$85 billion in health savings, and would maintain the essential

health care services that the poor and elderly rely upon.

Armed Services would find $80 billion.

Health, Education, Labor, and Pensions would find $70 billion.

Homeland Security and Government Affairs would find $65 billion.

Agriculture would find $11 billion while protecting the Supplemental Nutrition Assistance

Program.

Commerce would find $11 billion.

Energy would find $6 billion and may propose additional policies to generate savings

that would be applied to the infrastructure deficit or to reduce the deficit.

Judiciary would find an unspecified amount through medical malpractice reform.

Require the Finance Committee to report tax reform within six months that would deliver real

deficit savings by broadening the tax base, lowering tax rates, and generating economic

growth as follows:

Simplify the tax code by reducing the number of tax expenditures and reducing individual

tax rates, by establishing three tax brackets with rates of 8-12 percent, 14-22 percent,

and 23-29 percent.

Permanently repeal the $1.7 trillion Alternative Minimum Tax.

Tax reform must be projected to stimulate economic growth, leading to increased

revenue.

Tax reform must be estimated to provide $1 trillion in additional revenue to meet plan

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targets and generate an additional $133 billion by 2021, without raising the federal gas

tax, to ensure improved solvency for the Highway Trust Fund.

If CBO scored this plan, it would find net tax relief of approximately $1.5 trillion.

To the extent future Congresses find that the dynamic effects of tax reform result in

additional revenue beyond these targets, this revenue must go to additional rate

reductions and deficit reduction, not to new spending.

Reform, not eliminate, tax expenditures for health, charitable giving, homeownership,

and retirement, and retain support for low-income workers and families.

Retain the Earned Income Tax Credit and the Child Tax Credit, or provide at least the

same level of support for qualified beneficiaries.

Maintain or improve the progressivity of the tax code.

Establish a single corporate tax rate between 23 percent and 29 percent, raise as much

revenue as the current corporate tax system, and move to a competitive territorial tax

system.

Require the Budget Committee to report legislation within six months that would:

Extend discretionary caps and enforcement mechanisms through 2021.

Ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has

not stabilized.

Review total federal health care spending starting in 2020 with a target of holding growth

to GDP plus one percent per beneficiary and require action by Congress and the

President if exceeded.

Achieve program integrity savings of $26 billion in entitlement programs to curb fraud,

abuse, and other wasteful spending government-wide.

Create a working group to provide updated budget concepts for CBO and OMB.

Provide expedited floor consideration for a consolidated bill meeting these instructions:

If any committee fails to report entitlement program savings, impose across the board

cuts to programs in that committee’s jurisdiction as necessary to achieve the required

savings. To protect programs that benefit low income families, exempt from across the

board cuts those most in need.

Allow a group of at least five senators from each party to introduce a resolution in

lieu of the non-reporting committee.

If a resolution receives 60 votes on the floor, those recommendations will be added

to the comprehensive bill.

If the Senate does not agree to those recommendations, the comprehensive bill

cannot come to the floor under the special procedures established in the first (down

payment) bill.

Bar substitute floor amendments that upset the revenue/spending balance or any

amendments that make the deficit worse, but place no other limits on debate or the

substance of amendments.

Allow the Majority Leader and Minority Leader to limit debate and the number of

amendments, or impose other substantive restrictions by agreement, so that the Leaders

can manage the bill with a process that satisfies 60 Senators and the process cannot be

held up by a small group on either side. If the Leaders cannot agree, the bill is

considered under the regular order.

Hold any such comprehensive bill that receives 60 votes at the desk pending

consideration of the Social Security bill.

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Enacting Social Security reform if the comprehensive deficit reduction plan has passed

Consider Social Security reform, if and only if the comprehensive deficit reduction bill has already received 60 votes.

Reform must ensure 75-year solvency of the program and provide for a decennial review to

ensure it remains solvent. Any savings from the program must go towards solvency, not

deficit reduction.

If Finance fails to report Social Security reform meeting the instructions, allow a group of at

least five senators from each party to introduce a resolution with recommendations that

meet the committee’s instructions.

Bar substitute amendments that worsen the solvency of Social Security.

Combine any qualifying Social Security reform bill that receives 60 votes on final passage to

the comprehensive bill at the desk before being sent to the House as a single bill.

Vitiate the vote on the deficit-reduction bill if the Social Security reform bill does not receive

60 votes.

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