Like a zombie or Frankenstein's Monster, the "Gang of Six" is back, with a vengeance. They have just released a 3.7 trillion dollar deficit plan that is drawing praises from Senators ranging on the political spectrum from Coburn to Coons and Udall (CO).
So what are the highlights? Supposedly, according to Steve Benen,
...the plan would reportedly produce $3.7 trillion in savings over the next decade, including $1 trillion in new revenue by scrapping a series of tax breaks and tax expenditures.
But wait, you say. Aren't revenue increases DOA in the House? Benen asks the same question and goes on to say:
Coburn … noted the Congressional Budget Office would score the plan as a $1.5 trillion tax cut because it would eliminate the Alternative Minimum Tax. It would generate a significant amount of revenue out of tax reform and reduction of tax rates, which authors believe would spur economic growth.
So we're back to the "tax cuts increase revenue" zombie lie. What else is in it? First, a $500 billion dollar "immediate down payment". What would it do? I'm so glad you asked.
• 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.
So we have "chained CPI" as well as a spit on the grave of Ted Kennedy with a repeal of the CLASS Act. As well as a dig to the unemployed. Well at least the "doc fix" taken care of for 10 years.
And everything else in this plan requires endless committee meetings to meet "requirements". Take "tax 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
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.
Meaning that taxes get cut by an average of 5% for rich people, 2% for the rest of us. Corporate taxes are slashed as well, with also, from what I'm hearing, a drastic reduction or elimination of taxes on profits earned overseas. And yet the plan calls for a guarantee of 1 trillion in new revenue. Good luck with that.
Other parts are as equally "smoke and mirrors": Things like "Requiring committees to report legislation within six months that does the following:"
Followed by a list of points that "look good on paper". Like "cut 11 billion from Agriculture while 'protecting' Food Stamps"
As for Social Security, outside of the chained CPI, just a lot of words:
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.
As I mentioned before, Coons, Bennet (CO) and Udall (CO) all support it, and think that getting 60 votes on it would be pretty easy. Here's a paraphrase from The Hill regarding John Kerry's remarks:
Sen. John Kerry (D-Mass.) said the framework could be part of a deal to raise the debt ceiling because it is a balanced approach.
He called the percentage of deficit reduction achieved through higher tax revenues was “small” and questioned whether the plan does enough to stimulate growth but acknowledged that every senator would probably want to tweak the framework.
One point. EVERYTHING in this plan is REQUIRED to get 60 votes. If there's not 60, then nothing happens. And I'll leave Steve Benen to provide a conclusion:
It’s nice, I suppose, to see a bipartisan group of senators getting along and working together in a reasonably productive way, but (a) the plan is still likely to be pretty bad; (b) it’s a month too late to resolve the current crisis; and (c) House passage appears to be a fantasy.
Other than that, the Gang of Six is in great shape.
NOTE: The President made statements today regarding this plan. He said that in general the plan was "in line" with what he wants. I don't know if that means in terms of approach or specificity. He did say he did not have a chance to review the details (I don't think anyone has actually seen the full details).