The president’s deficit panel released its final report today and added details to its original leaked outline for how it suggests the U.S. balance the budget and enact a more stable fiscal policy. Dubbed “The Moment of Truth”, the document adopts some policies from other private deficit commissions and adjusts some of its prior recommendations.
An important adjustment to the original draft is more flexibility in fiscal policy to allow an economic recovery. The plan would delay most spending cuts until 2012 and suggests a temporary payroll tax holiday for a year. The plan does away with the itemized deduction for personal income taxes as well as nearly all tax expenditures, but spares the charitable deduction as well as the mortgage interest deduction for primary homes. All business tax deductions and expenditures would be eliminated.
For the first time, the plan also focuses on federal savings through health care reform. The plan would raise the retirement age to 69 to bolster Social Security, plus change the Medicare “doc fix” and medical malpractice law. But the biggest change is the suggestion to eliminate the tax exemption for employer-paid health benefits, a change that could raise both employers’ and employee’s health care costs with the aim of forcing individuals to make smarter fiscal choices on health insurance.
The plan now needs 14 of the 18 commissioners to approve it during the December 3 vote, and The National Journal is reporting that at least 10 of the 18 commissioners support the plan. That said, passage still looks unlikely but the commission’s co-chairs are optimistic their plan will have a lasting impact. “Whether we get two votes or 18,” said co-chair Alan Simpson, “this baby ain’t going away. Oh sure, it may be buried in an unmarked grave, and soon, but when the votes for the budget and extending the debt limit … comes up in the spring, this cadaver will rise from the crypt.”