Originally published December 1, 2010 at 9:22 PM | Page modified December 1, 2010 at 9:25 PM
The proposals
Key recommendations of President Obama's bipartisan debt commission, which leaders say would stabilize the national debt:Social Security
Increase retirement age by one month every two years after it hits 67 under current law, eventually reaching 69 around 2075 (early retirement would move from 62 to 64 on same timetable);
Lower cost-of-living increases;
Reduce benefits for higher-income beneficiaries and establish a higher minimum for poorer retirees;
Increase threshold on income subject to payroll tax;
Give retirees choice of collecting half their benefits early and the other half at a later age.
Taxes
Scale back child tax credit, mortgage-interest deduction and the deduction claimed by employers who provide health insurance;
Drop rates for wealthiest taxpayers from 35% to 28% and for those making up to $210,000 from 28% to 22%;
Increase gas tax by 15 cents a gallon;
Cut corporate rate from 35% to 28% and stop taxing overseas profits of U.S.-based multinational corporations.
Domestic spending
Freeze Pentagon salaries and bonuses, noncombat military pay and federal salaries for three years;
Reduce overseas bases by one-third and integrate children in military families into local schools;
Trim budgets of Congress and White House by 15% and federal work force by 10%;
Eliminate 250,000 nondefense contractors;
No funding for commercial spaceflight;
Eliminate "earmarks";
End grants to large and medium-sized hub airports and require all airports to fund a larger portion of aviation security;
Cut funding for public broadcasting.
Health care
Phase out tax-free status of employer-provided health benefits by 2038;
Limit annual cost increases for Medicare and Medicaid to no more than 1 percent above the growth rate of the economy;
Increase cost-sharing for Medicare recipients while limiting out-of-pocket costs;
Demand rebates from drug companies that want to participate in Medicare.
The Associated Press
WASHINGTON ? Members of President Obama's debt-reduction commission indicated Wednesday they were split over their chairmen's far-reaching plan for long-term spending cuts and tax increases, an indication the proposal is more likely to lead to further political sparring than to legislation.
As the two chairmen released their final package of proposals for trimming nearly $4 trillion from deficits through 2020, the 18-member panel met publicly for the first time since the midterm elections.
The final recommendations are largely the same as an initial plan issued last month: a cap on discretionary spending through 2020, a tax-code overhaul and Social Security changes that include raising the retirement age. These steps would slash the federal deficit by $828 billion by 2015 alone.
But some concessions were incorporated to draw greater support among the panel. A proposal to drastically limit the mortgage-interest deduction was eased.
On Social Security, the focus of significant criticism weeks ago, the panel proposed a hardship exemption for workers based on factors such as physical demands of labor and lifetime earnings.
In advance of the commission's vote Friday, the split over how to curb the nation's mounting debt ? and the political wariness about embracing changes to popular tax breaks and benefit programs ? were in sharp focus even as two senior members of the Senate Budget Committee lent some bipartisan support.
The senators ? New Hampshire Republican Judd Gregg and North Dakota Democrat Kent Conrad ? joined in backing the plan, along with the two commission chairmen and three other members who are not elected officials.
The panel includes 12 members of Congress and six private citizens, including the chairmen, former Republican Sen. Alan Simpson of Wyoming and Erskine Bowles, a Democrat and former chief of staff to President Clinton.
"While there are things in this plan I dislike intensely, and I do, there are also things in this plan that I think are grand-slam home runs for the American economy and for the future competitive position of our country," said Conrad, the Budget Committee's chairman.
Among the measures he cited with approval was the proposed tax-code overhaul to close tax breaks, lower rates and increase revenues.
Conrad, up for re-election in 2012, also invoked the recent debt crises in Europe. "If we fail to act now," he said, "our country could find itself in a circumstance in which we have to take draconian action at the worst possible time, in the midst of a crisis."
But with opposition from four House members ? three Republicans and one Democrat ? and with several other members indicating they were leaning in that direction, the panel seems all but certain to fall short of Obama's 14-vote threshold to send a package to Congress.
What is unclear is whether that outcome would consign the plan to a dusty shelf along with many past commissions' politically unpalatable recommendations for addressing the nation's fiscal imbalances, or whether Obama or congressional Republicans will aggressively pursue at least some elements.
That was the idea among some White House advisers when Obama established the commission in February.
Rep. Paul Ryan, R-Wis., who will be chairman of the House Budget Committee, and Texas Rep. Jeb Hensarling, a member of the House Republican leadership team, each said at the meeting that the package presented by Bowles and Simpson cuts domestic spending by too little, especially for Medicare and Medicaid; raises taxes too much; and does not repeal the health-care law signed by Obama this year.
In contrast, Gregg, who is retiring at the end of the year, said Bowles and Simpson were right not to reopen the health-care debate and to build upon the law's long-term cost-saving provisions.
The health-care law would save an estimated $1 trillion over two decades by squeezing payments to health-care providers and increasing out-of-pocket costs for many beneficiaries. The chairmen's plan would go further, which caused some Democrats on the panel to object to it.
While House Republicans complained about the proposed tax increases, they applauded the chairmen for producing revenues not by raising income-tax rates but by proposing to eliminate up to $1 trillion a year in tax breaks for individuals and corporations.
The plan would use most of the revenues from reducing or closing tax breaks, including the mortgage-interest deduction, to lower income-tax rates for everyone. A smaller amount would go to deficit reduction.
Depending on how wavering lawmakers vote, the plan could have a bipartisan majority ? if not a 14-vote supermajority ? that could enhance its standing as a model for legislation.
Both Illinois Sen. Dick Durbin, the No. 2 Democrat in the Senate, and Rep. John Spratt of South Carolina, who lost his race for re-election but for now is still the chairman of the House Budget Committee, are considered potential yes votes.
And two Senate Republicans, Tom Coburn of Oklahoma and Mike Crapo of Idaho, indicated they were considering support.
Information from the Tribune Washington bureau is included.
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