Nikki, I was surprised to see elimination of the mortgage interest deduction as part of the plan. Housing is already a basket case and this would not help that industry segment get back on its feet and would also reduce the number of people who can even swing a mortgage because they would lose a significant tax deduction.

These aren't givens, only ideas. But as I understand it, the elimination of deductions is offset by the creation of lower tax brackets, which results in lower income taxes.

This Mother Jones article makes more sense than the commission.

http://motherjones.com/kevin-drum/2010/11/deficit-commission-serious

The commission's recommendations don't even treat the real problem in the graph,

They a prescribing aspirin for a brain tumor.

They never addressed taxing hedge fund managers like everyone else (their income is taxed at the 15% capital gains rate). This is so uninspired.

Nikki, I was dismayed to hear such media attention about raising the full age of Social Security. Many people may be unaware that has already happened for persons for after a fixed date in the 50s. I'm not sure when that is, but my full retirement age is 67.5, and it looks like 69 won't come into affect until ten years AFTER my son retires. I agree with you, the time in now, people. RRRRR

I don't know if I agree. Most of the cuts seem to detrimental to the middle class. It's shrinking anyway. As for bipartisanship -- that's a fairy tale Obama needs to stop telling.

Nikki, I want to spend some time looking at this & maybe write about it. I think it is absolutely the correct approach to have a bipartisan commission send up these trial balloons. And of course it is complicated. The mortgage interest deduction, for example, may go first for second homes, then homes exceeding some percentage of the mean home value (like 300%) and then that is all offset by a lower tax rate.

Could Congress ever get this right?? In, like, a million years???

This recommendation from the deficit commission is a classic scam. Reagan took away credit card interest deductions, now they would like to remove mortgage interest deductions. Capital gains rates go no where, yet the interest deductions which the middle class uses get eliminated. This is a huge swipe at the middle class and it will succeed only because the middle class is not looking.

Prior to the new deal, mortgages were for 7 year terms. Extending them to 20 and then 30 years changed the ability to own homes and land dramatically. In addition, most farm land is owned by big corporations now. Policies like this will cause a shift which will make tenant farmers and guest workers of rural resident who stay. There will be an influx of many to the cities causing shanty town slums like the ones that ring cities like Sao Paulo Brazil. School systems would dry up due to inability to use them. I personally think this progression is a disaster in the making.

I'm with you, in fact I was going to write about this. We HAVE to FIX the problems, and I'm willing to make sacrifices to do it. Also, by the way, they keep yapping about raising the retirement age: News Flash, it's already happened. My retirement age isn't 65, it's 66 and 10 months or something like that.

The age... Most people are still working after retirement because they have to. That in turn takes jobs away from younger people. This happens a lot in the teaching category.
I just shudder in fear.
Rated with hugs

I haven't had a chance to really review the report. What seems certain is that something will have to be done. Either way it goes we will have to bite the bullet.

Social Security isn't the problem, it's solvent going forward several decades and could be made permanently solvent with a minor adjustment to the cap on payroll taxes, the Republicans have been trying to get rid of SS for the last 70 years, and by conflating it with Medicare under the rubric "entitlements" they've managed to persuade Americans that there's something wrong with their public pension program

Medicare/Medicaid is a serious burden on the economy, but that's because of gouging by the insurers, providers and Big Pharma, the best way to lower those costs is to get control of the medical/industrial complex

and then there's "defense", we don't need to spend nine times as much as China or as much as the entire rest of the world (including China) combined to defend ourselves from foreign threats

in the long term, we can only reduce deficits by having a healthy economy, that means full employment, and, yes, redistributive taxing and spending policies to reverse the acclerating concentration of all American wealth in the hands of a tiny minority who invest it overseas, neither democracy nor capitalism will survive if we continue down the path toward a banana republic economy, and that's where we've been headed for the last forty years

in the short term we need to spend our way out of this recession, that'll do more to lower the deficit in the long run than cutbacks now

I'm all for simplifying the tax code, but I would prefer they look at the corporate code in detail first. There are so many deductions that could be changed and loopholes that could be closed.

The mortgage interest deduction and child tax credit are basically the only personal deductions left for people of moderate or modest means. If we're going to take those away, we need to drastically lower the rates on those brackets.

Politically, this was much smarter on Obama's part than I had thought; there are real recomendations that could actually be implemented. You might not agree with most of it, but it's not insane by and large. So when the Republicans refuse to move on anything, despite screaming about the deficit and despite the commission being led by a prominent Republican, it will be golden for the Dems.

Nikki, I'm afraid the only way anything is going to work over the next two years is for some strong leadership to step up. Obama should set the example. I just don't see anybody yet who has the backbone and will. But this plan does looks workable.

I read a lot about this this morning. Social Security recipients haven't had a COLA raise in two years anyway. If they want to make a fair tax, make it 15% on everyone, no exceptions, and see how loud the conservatives yell. Why not try ending all military engagements, bar none. That includes bringing home military personnel that have been in Germany since the end of WWll. The same with Korea. Why do we have military personnel in Japan? The military budget for the US is higher that the military budgets for the rest of the world, combined. It's insane. Raising the retirement age for SS would have to be fazed in very slowly because people who have paid into it for 30 years are not going to want it changed. I agree, it should hurt everyone evenly. But the rich can deal with cuts a lot easier than a poor man can. I agree with Steve, this needs to be looked at and studied before everyone starts throwing stones.

I worry about the effect of losing the mortgage deduction. Unless it was executed carefully, it renders unaffordable mortgages to which people have already committed based on the tax break. Yes, going forward, they should be more conservative, but we can't really blame them for not knowing what the government is going to do. Causing a whole new round of foreclosures won't help anyone.

And I worry about reducing the cost-of-living raises for Social Security, because I have parishioners who would not have sufficient food and propane if it weren't for the church. These aren't people with 45-foot RVs; they're mostly widows of miners who have outlived their savings.

Our tax code does need to be greatly simplified, but not like that.

The proposal is not outlandish but it obviously fails to include the costs of lowering the corporate tax burden into the numbers. Lost revenue has to be accounted for in this plan. Like all Republican plans it will ultimately only be benefiting the top few percent, which we know for a fact after thirty years of Reaganomics playing its course just doesn't work at all.

That the panel highlights the elimination of middle-class friendly deductions like home mortgage interest and the child tax credit tells me all I need to know about what's going on. How about the elimination of the 15% rate on hedge-fund income? Shouldn't that be at the TOP of the list?

Certainly, I'd like to see necessary massive reform and simplification of our tax system, and I would even support a fairly applied flat tax or a VAT such as finances much of Europe's democracies. But that isn't what this "reform" is going to give us. What it will give us -- as every previous tax "reform" has given us -- is more loopholes for the rich.

Forgive my going off on a sidebar, but the principle -- and the principals -- remain the same with Social Security reform. The poor and the disabled will get hammered, and the rich will continue to get a pass.

Take John McCain -- please! He calls SS a disgrace, but what's a disgrace is that he draws nearly $30,000 a year in SS benefits, in addition to a pension as a disabled vet that provide him nearly $50,ooo a year, in addition to his Senate salary, in addition to other income that brings his total annual income to around $500,ooo a year. That doesn't include the millions his wife earns separately from not working at all.

We may need to be "originalists" abut SS and keep in mind, it was never intended as a retirement program -- it was intended to keep the elderly poor from starving to death. Real reform would institute a needs test and remove the income cap. No one should expect either from this cowardly Congress.

As for taxes, maybe we should simply go back to what was in place back in America's glory days -- The Fifties of which conservatives are so inordinately fond. I'm all for it -- the top tax bracket was 92% and the avg burden of the wealthy was around 50%. Had that been the case since 1980, no one would be talking about huge deficits today in spite of W's wastrel ways.

But that wasn't the case -- the Republicans pushed and continue to push their nonsense about a perpetual motion machine -- or should I say a perpetual money machine -- the Big Lie that decreasing taxes increases revenues and stimulates the economy thru a benign trickle-down theory that amounts to no more than crumbs from the master's table.

In short, until bullshit replaces taxes as a fuel for the economy, the Republican agenda will do nothing to fix the deficit.

if we stopped funding war... maybe we could see some real tax cuts: "On July 27, 2010, Congress passed H.R. 4899/P.L. 111-212, the FY2010 Supplemental request and provided an additional $34.4 billion in war funding for DOD and the State Department, largely to cover the cost of deploying 30,000 additional troops to Afghanistan that President Obama announced on December 1, 2009 and to ramp up foreign aid levels in both Iraq and Afghanistan..
With passage of the FY2010 supplemental, cumulative war funding totals $1.12 trillion including $751 billion for Iraq, $336 billion for Afghanistan, and $29 billion for enhanced security. In FY2010, Afghanistan receives about 60% of the total and Iraq 40%..." just saying.

I agree it's a bold and reasonable starting point. r.

Great discussion here. I'm reserving judgment for a while until we see how things really sort out but I'm leaning towards "fuck the commission".

Just based on the sampling of responses in this comment thread, it appears we will never be able to agree on a solution if we a) evaluate it from the point of view of our personal circumstances/economic status and b) insist that everybody suffers equally. I haven't looked at the bipartisan commission's tax plan yet, but in general I tend to favor a marginal flat tax which gives an off the top deduction for a reasonable standard of basic living; i.e., food, basic clothing, adequate shelter.

Lezlie

To summarize the news story I read this morning, liberals are loudly complaining about the recommendations and conservatives are loudly complaining about the recommendations. Result: nothing will happen.

When I first read the suggestions, my initial reaction was: "Boy, that Alan Simpson is a genius! Not only did he co-create comedy classics like Hancock's Half Hour and Steptoe and Son, but now he has produced another howler."

Then I realised that this was another, American Alan Simpson, and that the suggestions were supposed to be taken seriously. And then I threw up a little in my mouth.

One night about fifteen years ago I helped a friend cater a very nice sit down dinner part for about 8 people. We are talking super wealth people. Picasso and other such pictures hanging all over kind of wealth. As I was busy in and out of the dining room and trying to appear invisible I eavesdropped. They were talking about social security. This was back when all the talk was about how the whole system was going to run out of money. One kindly society matriarch suggested that people in their income bracket shouldn't be collecting it at all, "why," she said, "it's not like we need it." Well, you should have heard the cries of self-righteous indignation from every single other person at that table. It took all of my self control to keep my mouth shut and just collect the salad plates, but as I exited the dining room I looked back to my side and made eye contact with that woman and I sensed that she was as disgusted as I was.

The fact is the very rich live in terror that they will not continue to be very rich and for many of them, they believe it is their just due: to have much more than nearly everyone else BECAUSE they believe they deserve it.

Second comment, came back to read again. On NPR today they were announcing some contest winners. Gubmint workers who had good ideas to save money. One of them was to not use overnight services so much. I think we need something bigger than an Xacto knife for this.

I am probably naive as the come, but I would like to see the IRS dismantled in favor of a flat nationwide sales tax. No loopholes, exemptions, or seemingly endless tax codes. Everyone doing commerce in the US pays sales tax. Seems reasonable to me.

There is something to keep in mind, which I think practically everyone is missing. First, each limit or level that they place in the legislation will change over time to the detriment of the middle class. A $500,000 dollar home will eventually be quite common. "Simplified tax codes" are never restructured to benefit the middle class. Tax cuts to the top incomes do not increase revenue. And any level set will be a bargaining chip in the future. It creates negotiating points which the middle class will lose because the middle class does not have media outlets. This sort of restructuring is a time bomb. Like Tom Cordle said, you will notice there is no offer to increase the rate from hedge fund income. Notice there is no offer to increase capital gains. This is a trap. This is not a "workable solution." This is a stone cold set up for the middle class. Remember the $85,000 cap on SS tax? That level got stuck for years. What happens with inflation? The shift works to the benefit of higher earners. These function like a trap for the middle class.

It's REAL simple to balance the budget. The deficit is currently around a Trillion dollars???? Done.

http://costofwar.com/

Toss in the $30 Billion we're giving Israel and we come out WAY ahead on the deal.

If our politicians could be as reasonable as you. Perhaps you should run for President! But that would be an another country than ours, where people could sit around a table and talk without shouting.

I'm with you on this one Nikki. But I can't imagine the Repubs signing on to anything that actually increases taxes, like scrapping mortgage interest deductability. It's in the nature of compromises that everyone can find something to dislike and in this turbo-charged partisan environment, I am not optimistic.

I'm puzzled by the argument that cutting the DOD's budget would solve our economic problems....Could you imagine the unemployment numbers if we didn't have the war machine?

Sorry Nikki.. I was so into reading the comments that I forgot to say great article... I hope we as a country can figure this mess out one way or another... R

The reason for eliminating the mortgage interest deduction is that it benefits the better off at the expense of the poor, who rent, thus distorting the housing market.


Turbo Tax can find you over 350 deductions. That's an absolute disgrace. A simplified tax code should be something along the lines of Income X rate = tax owed, not income adjusted by 50 pages of inexplicable nonsense.

The one I'd like to see go is the deduction for senior citizens. When it was enacted, the idea was to help the elderly who were more likely to be poor than younger tax payers. Now, the opposite is true. So basically, it's a federal anti-poverty program that gives benefits to needy souls like Warren Buffett.

I don't want to defend hedge fund managers. I don't know any, but I must say, I find the 'don't touch my deductions until you've first hammered them over there' attitude to be counter-productive.

IMHO, the first move should be to end the war.

The FairTax, The FairTax, The FairTax.

Read all about it. WWW.fairtax.org

I'm all for "suffering together" and making sacrifices -- and when I see the top earners begin to feel even a wee pinch I'll feel better about tinkering with mortgage interest deduction and other tax credits that benefit the middle class. But you're right, we have to start somewhere.

I wish some news agency would tackle rampant military waste, not in war zones, but here, in development. I have family members with some really crazy stories -- when projects are funded (based upon inflated projected costs) the project managers WILL SPEND every last cent (sometimes on office furniture or unnecessary software - and improperly managed software licensing fees are a whole other money pit) so that their budget isn't cut for the next year. No one EVER says, "Yeah. We thought it would cost this much, but it actually cost less! Here's the leftover money..."