Last week I wrote about the coming onslaught against Social Security, an orchestrated effort by deficit hawks to roll out "deficit reduction" plans that would cut Social Security. The Catfood Commission chairs preempted the schedule a bit, by releasing their proposal to try to prevent damaging leaks of the plan (as if the plan wasn't damaging enough in and of itself).
But to return to the schedule, the Domenici-Rivlin Bipartisan Policy Center released its plan Wednesday, as expected. As expected, it recommends severe Social Security cuts. But as an added bonus, it finds new ways to stick it to the "lesser" among us. Froomkin has a good summary.
This latest group hails from the Bipartisan Policy Center, and its signature proposal may end up being a whopping 6.5 percent national "Deficit Reduction Sales Tax" -- just the sort of thing that is devastating to people who live on a budget while not really mattering so much to the rich.
In the name of allegedly controlling health care costs, the group also recommends significant increases in Medicare premiums in the short term. And after 2018, Medicare beneficiaries would either be forced to pay out of pocket for any and all cost increases more than one percent greater than the growth rate of the economy -- or they would be invited to leave the government program entirely and find private insurance instead. That would no longer be Medicare as we know it -- or as future retirees expect it.
The group's next most major recommendation for cutting healthcare spending is the imposition of an excise tax on the manufacture and importation of beverages sweetened with sugar or high-fructose corn syrup.
Like the plan from presidential commission chairmen Erskine Bowles and Alan Simpson, this one also would significantly reduce Social Security benefits for most retirees. It doesn't technically call for an increase in the retirement age, like Bowles-Simpson does, but it accomplishes essentially the same thing under another name.
This plan would "index the benefit formula for increases in life expectancy" starting in 2023. In both cases, the net result would be lower monthly benefits. It would also dramatically reduce benefits by changing the calculation of cost-of-living adjustments, and by chopping checks for top quarter of beneficiaries.
Meanwhile, much like Bowles-Simpson, it would actually lower income tax rates for the rich (albeit while removing hugely lucrative deductions). There would be two individual income tax rates, 15 percent and 27 percent, instead of the current six rates that range up to 35 percent. The corporate rate would drop to 27 percent from 35 percent. Capital gains would be taxed at a higher rate, as ordinary income.
Dday points out that there's one element of this plan that is an improvement on Simpson-Bowles: the recognition that "the economy needs spending right now to increase demand. Yes, spending in a deficit reduction report." Simpson-Bowles essentially ignored the current state of the economy, of the high unemployment and low consumer demand that has characterized this recession, so at least there's that.
But it's still an incredibly destructive construct for the country, setting us on a track that will further disadvantage the working and middle classes and just keep on expanding the huge income gap that has grown steadily for the past three decades. The worst of that would be felt by the nation's seniors--not necessarily the current ones, but near retirees and future retirees. If you haven't signed the pledge to keep Social Security strong, please do. It will help us to marshal our forces should the time come for the voting on these proposals.