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Re: Republican Tax Plan

Posted by David Fairthorne on Thu Apr 7 14:29:42 2011, in response to Re: Republican Tax Plan, posted by Charles G on Thu Apr 7 07:07:33 2011.

Anyone who takes a sober look at the state of the budget will reach the same basic conclusion -- spending cannot escalate at the current rate and likely needs to be sharply reduced in the near term.

Either spending must be reduced or taxation must be increased, or some combination of the two. $6 trillion in the first ten years seems about the amount needed.

Ryan is the first person to put anything on the table that recognizes this fact.

Except for the bipartisan Simpson/Bowles commission, of which Paul Ryan was a member. Its co-chairs reported in November 2010.

According to http://en.wikipedia.org/wiki/National_Commission_on_Fiscal_Responsibility_and_Reform:

On November 10 Commission co-chairs Simpson and Bowles released a draft proposal for consideration by other commission members. The proposal presented five "steps."

The first step was a $200 billion reduction in discretionary spending with proposed cuts including reducing defense procurement by 15% and closing one third of overseas bases, eliminating earmarks, and cutting the federal work force by 10%.

The second step was $100 billion in increased tax revenues through various tax reform proposals, such as introducing a 15 cent per gallon gasoline tax and eliminating or restricting a variety of tax deductions such as the home mortgage interest deduction and the deduction for employer-provided healthcare benefits.

The third step was controlling health care costs by maintaining the Medicare cost controls associated with the recent health care reform legislaton, in addition to considering a public option and a further increase in the authority of Independent Payment Advisory Board.

The fourth step was a reduction in entitlements, including farm subsidies, civilian and military federal pensions and student loan subsidies.

Finally, the fifth step was modifications to the Social Security program to raise the payroll tax and to increase the retirement age.

The co-chairs also recommended some measures they felt would stimulate economic growth, such as a cut in the corporate tax rate from 35% to a more internationally competitive 26%.

I prefer the bipartisan Simpson/Bowles proposal to the Republican Ryan plan, because the Ryan plan is biased in favor of the rich, for party political reasons.

For more about the Ryan plan, see http://online.wsj.com/article/SB10001424052748703806304576242612172357504.html.

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