Simpson-Bowles Debt Reduction Plan

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National Commission of FiscalResponsibility and Reform
A presidential commission co-chaired by Senators Alan Simpson and Erskine Bowles, created by Pres.Obama to identify "...policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run." Its report was released on 1 Dec 2010 but failed a vote on 3 Dec. with 11 or 18 votes in favor, needing 14 votes to formally endorse the plan.
Chairmen's draft proposal.

• $200 billion reduction in discretionary spending, including reducing defense procurement by 15%, clsoing 1/3 of overseas bases, eliminating earmarks, cutting the federal work force by 10%.
  
• $200 billion in increased tax revenues through various tax reform proposals - 15 cent per gallon gasoline tax, eliminating/restricting a variety of tax deductions (i.e. home mortgage interest, employer-provided healthcare benefits cost).
  
• Controlling health care costs by maintaining the Medicare cost controls associated with the health care reform bill, considering a public opeiont and an increase in the authority of Independent Payment Advisory Board.
  
• A reduction in entitlements (farm subsidies, civilian and military pensions, student load subsidies).
  
• Modifications to the Social Security program - raise the payroll tax and retirement age.
  
• Stimulate economic growth through a cut in the corporate tax rate from 35% to a more competitive 26%.
  

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Obama should resurrect the Simpson-Bowles deficit-reduction plan
Can President Obama put the country on a sustainable economic recovery path? He can if he resurrects and champions the Simpson-Bowles deficit-reduction plan, writes Thomas L. Friedman. If he did that, he would create a national consensus that would trump his opponents, right and left.
What would it look like if the president were offering such leadership? First, he'd be proposing a deficit-cutting plan that matches the scale of our problem — one with substantial tax reform and revenue increases, a gasoline tax, deep defense cuts and cutbacks to both Social Security and Medicare. That is the Simpson-Bowles plan, and it should be Obama's new starting point for negotiations. The deficit plan Obama put out last September is nowhere near as serious. "It is watered-down Simpson-Bowles," said MacGuineas. "Most people don't even know it exists." Second, he'd offer a plan in which the wealthy have to pay their fair share and more, because they've had a great two decades. But everyone, including the middle class, has to contribute something. This has to be a national effort. Third, he would offer a plan that is aspirational. It would not just be a road map to balancing the budget but to making America great again through reignited economic growth.
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