Presidential Fiscal Commission Report

The 18-member National Commission on Fiscal Responsibilty and Reform (NCFRR), appointed by President Barack Obama to find ways to tackle burgeoning fiscal deficit and debt, issued a formal report on December 1, 2010. The report is a wake-up call for American people and policymakers to deal the issue with utmost urgency. The report includes the following salient features:

* Deficit Reducton
Cut $3.9 trillion from deficits estimated at $8.3 trillion over 2012-20.
Produce a deficit of $421 billion in 2015 and $279 billion in 2020.
Stabilize the national debt at 66% of the the size of the economy, a more sustainable level.

* Social Security
Increase the Social Security retirement age by one month every two years after it reaches 67 under current law. It would reach 68 around 2050 and 69 around 2075. Raise the early retirement age from 62 to 64 in the same timetable. Workers in the manual labor would get exemption.
Lower COLA increases.
Reduce the benefits for high-income retirees.
Gradually raise the upper limit of the income levels (currently $106,800) that is subject to Social Security taxes.
Give the beneficiaries to collect half the benefit early and the half later.

* Taxes
Overhaul both individual and corporate tax structures.
For individual taxfilers, five rate structrures will be simplified to three: 8, 14 and 23 percent.
Corporations will face a top rate of 26%, down from 35%.
Scale back a host of deductions, including mortgage interests, child tax credits and a litany of other deductions.
Increase gas taxes by 15 cents a gallon to fund the transpotation programs.
Devote $80 billion in increased revenue to the deficit in 2015, rising to $180 billion in 2020, capping revenue at 21% of GDP.

* Domestic Spending
Freeze Defense Department salaries and bonuses for three years, and noncombat military pay at 2011 level for three years.
Reduce overseas bases by one-third, cut spending for base support and integrate children in military families in local schools.
Reduce Congressional and White House budgets by 15%, freeze federal compensation at nondefense agencies for three years, cut federal work force by 10%, eliminate 250,000 nondefense contractors and end money for commercial space flights.
End grants to large- and medium-sized hub airports; require airports to fund a larger share of security costs.
Cut funding for public broadcasting.

*Health Care
Phase out by 2038 the tax free status of employer-provided health benefits, providing incentives for people to enroll into cost-conscious insurance plans.
Limit annual rate of increase of Medicare and Medicaid spending by no more than 1% over the rate of growth of economy. This would be accomplished by rewarding quality instead of sheer volume, demanding rebates from drug companies that want to partcipate in the two legacy plans and raising cost-sharing for Medicare recipients.
Replace the federal employees' health insurance benefits with a voucher plan in which they would receive slowly growing subsidies to buy insurance.

Source: The Associated Press and The Dallas Morning News