There is a lot for fiscal conservatives to like in President Obama’s Fiscal Commission. A full explanation of the first draft can be found here. A shorter summary can be found here. Specifically, the discretionary and defense spending cuts need to be considered and, while politically difficult, should attract some support from both sides of the aisle.
The most questionable aspects of the plan focus on Social Security with reform ideas such as:
Index the retirement age to longevity — i.e., increase the retirement age to qualify for Social Security — to age 69 by 2075.
Index Social Security yearly increases to inflation rather than wages, which will generally mean lower cost of living increases and less money per average recipient.
“Increase progressivity of benefit formula” — i.e., means test part of Social Security benefits by 2050.
Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that’s only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.
This is a massive tax hike and is designed to make the program another welfare program (redistribution of wealth) rather than the original vision of a “social safety net” for all Americans. Liberals have typically opposed efforts to make Social Security more “progressive” as the system will lose needed support from the wealthy, but that strategy appears to have been abandoned.
Personally, I think it is obvious that Social Security needs to allow young people to opt into a system where they own their own accounts. All the tax hikes and raising retirement ages is like rearranging the deck chairs on the Titanic.
Of course, the recommendations are nowhere near as fiscally-conservative as I’d like. The folks at Americans for Tax Reform explain the many issues fiscal conservatives might (and indeed should) have with the plan. Nonetheless. it would seem that the spending reductions are a good place to start. Hopefully they provide a foundation for a needed national discussion.