With the Gang of Six plan in the works as a back up for a short-term debt deal maybe in play or maybe not in play, it's worth taking a look at some of what's in it.
Here are a few highlights in the Gang of Six outline, which borrowed heavily from the Simpson-Bowles commission's unofficial, unadopted, failed non-report. First, from Think Progress, the cut in tax rates and the reduction of Social Security benefits:
The Congressional Budget Office will score the plan as a $1.5 trillion tax cut, as it lowers the corporate tax rate from 35 percent to between 23 and 29 percent, eliminates the alternative minimum tax, and lowers personal income tax rates. But by closing loopholes, the Gang of Six says they’ll raise $1.3 trillion in revenue.[...]The Gang does the same thing that Simpson-Bowles did when it comes to taxes. There's a discrepancy noted between what the CBO is scoring as $1.5 trillion in tax cuts and what the Gang claims as $1.3 trillion in revenue that comes from faulty assumptions. Just like B/S assumed that the Bush tax cuts and the AMT would expire, so does the Gang.
The plan also recommends “reforming” Social Security in ways that will even affect current retirees. But not a penny of the money saved will go to deficit reduction, which begs the question — why include Social Security at all? The Gang of Six has said all the changes will go toward securing the long-term financial security of the program, but Social Security is already solvent until 2037 and does not contribute to the deficit.
The cuts in the Gang of Six plan aren’t minor, either. It proposes a chained CPI adjustment to Social Security, which may not be a bad idea when combined with other measures to boost benefits and strengthen the program, but on its own is tantamount to a $1,300 cut each year for recipients over their lifetimes.[...]
Here's another casualty of the Gang of Six (besides reality): Sen. Ted Kennedy's CLASS Act, a provision he authored that was included in the Affordable Care Act to create a voluntary federal long-term care insurance program. David Dayen explains:
Currently, people requiring long-term care need either private insurance or to qualify for Medicaid. Right now, around 40% of all long-term care is funded through Medicaid, and given that Medicaid faces budget cuts that could rip it of its effectiveness, that’s simply not sustainable. Under the CLASS Act, subscribers could purchase an affordable long-term care insurance policy run by the government, to give them a modicum of protection in their later years.It would provide a net benefit to revenues, potentially ease costs for Medicaid, and provide a modicum of additional security for older Americans. It's small, has potential to really make a difference in middle-class Americans' lives, and makes sense. It must therefore be sacrificed to the altar of lowering the corporate tax rate. Because that's what passes for serious among the Very Serious People who Care Very Deeply about the deficit.
The Gang of Six, in their plan for austerity, eliminated the CLASS Act before it even had a chance to collect any premiums or set up its systems. Kent Conrad never liked the CLASS Act, and now he got his wish. There were concerns about the financing over the long term, but importantly, CBO estimated that the CLASS Act would actually be a net benefit to federal revenues over the next ten years, by about $78 billion.