We all knew something like this would arrive…The government states a bunch of proposed spending cuts (which of course isn’t just cost cutting but increased tax revenues and reformed social programs etc for the private sector). The debt panel that Obama has put together states that none of these changes will be enacted until 2012 or 2013 depending upon how slow the recovery continues (if we ever do recover)…
Here’s an excerpt of the list below from the above CNN article:
[Spending] targets: The report recommends that spending ultimately be capped at 21% of gross domestic product.
Rein in spending: The report proposes close to $200 billion in domestic and defense spending cuts in 2015. That’s a key way it would meet Obama’s goal of working the annual deficit down to 3% of GDP by 2015. In fact, the final report would do one better, getting the deficit to less than 2.5%.
Control health care costs: The report recommends capping growth in total federal health spending — everything from Medicare to health insurance subsidies — to the rate of economic growth plus 1%.
It also proposes reforming physician payments, cost-sharing with Medicare beneficiaries, malpractice law and prescription drug costs.
Reform tax code: The report would lower income tax rates and simplify the tax code. It would abolish the Alternative Minimum Tax — the so-called wealth tax — and proposes either significantly reducing or eliminating the hundreds of tax breaks in the federal code that reduce federal revenue intake by more than $1 trillion a year.
Raise gas tax: The report would raise the federal gas tax by 15 cents a gallon. It would dedicate the extra revenue to fund transportation and limit spending on projects to whatever has been collected by the increased tax that year.
Cost of living increases: It would offer less generous annual cost-of-living adjustments and reduce benefits for wealthier recipients.
Retirement age: The plan would slowly usher in an increase in the retirement age from 67 to 68 by 2050 and to 69 by 2075. Over the same period, the early retirement age would increase gradually from 62 to 64. There would, however, those who are unable to work past age 62 would be offered “hardship exemptions.”
Payroll tax: The report also recommends expanding over 40 years the amount of workers’ income subject to the payroll tax, which funds Social Security. As a result, the amount of one’s earnings subject to the payroll tax would rise to $190,000 in 2020, about $22,000 higher than it would be under current law.
Protection against poverty: To prevent seniors from falling into poverty — a key mission of the Social Security program — the report proposes creating a new special minimum benefit.
For low-income workers with 30 years of earnings, benefits could never fall below 125% of the poverty line in 2017, a level that would be indexed to wages thereafter. The formula would be reduced for workers with less than 30 years of earnings but more than 10.
With the ridiculous debt spending that occurs by most households combined with the inflated housing and energy prices, these increases in tax costs will have detrimental effects to lower and middle-class. Additionally, with the renouncing of the dollar as the main stable currency by countries such as China, and a target date of debt reduction to 40% of current levels by 2035, the continual QE spending along with endless under the table funding does not promote any means of a re-vamp that will bring about any type of conducive, underlying change in our economic situation. The government has already shown over and over that it will save the big guy before the little guy, and once again, I feel that these so-called “tax increases and spending cuts” are just a facade to hide us from the profligate lives that have brought us to this downward spiral, and that will continue to erode the very core of this country’s economy.
But it’s ok…let’s just enjoy the holidays. For now. Mayans call for 2012 apocalypse. We might just see it…