The chairs of the bipartisan fiscal commission organized by the White House have released preliminary recommendations for reducing the deficit two weeks ahead of schedule. The proposed cuts, which the commission says would remove $4 trillion from the deficit between 2012 and 2020, emphasize reducing entitlement spending, reducing defense spending, and overhauling the tax code to remove a number of tax breaks. Here's a handy breakdown by the Wall Street Journal. The next step is for the panel's 18 members to vote on the proposals; 14 must vote yet for the package to be passed onto Congress, which at this point looks extremely unlikely. Here's what reporters and analysts are making of the suggested deficit cuts and their likely economic and political impact.
- These Proposals Are Politically Impossible The Wall Street Journal's Corey Boles and Martin Vaughan write, "The sweeping plan is likely to provoke a political firestorm. It touches many of the third rails of politics, including defense spending, Social Security and middle-class tax breaks long seen as inviolate." The plan would also "limit federal spending on health care, gradually raise the retirement age and lower the corporate tax rate to 26%, according to a draft set of proposals released Wednesday."
- This Should Start National Conversation, But Won't Outside the Beltway's Doug Mataconis sighs, "If we lived in a country with adult political parties, the release of the Commission’s report would serve as the beginning of a long overdue national conversation about how to get our fiscal house in order. Liberals would recognize that social spending would have to be cut, and conservatives would recognize that defense spending cuts and tax increases would have to be on the table. Instead, what we’re likely to see is more of the same political gamesmanship — liberals accusing the GOP of wanting to starve Grandma, conservatives accusing liberals of just wanting to raise taxes so they can spend more. And the debt will continue to rise."
- What It Would Do to Social Security The New York Times' Jackie Calmes writes, "The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years. But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books."
- What It Would Do to Health Care The Atlantic's Derek Thompson reports, "The commission would change the Medicare reimbursement formula. This would give doctors a haircut, but balance it by reforming tort law to make doctors less exposed to law suits. It would require drug companies to offer rebates for Medicare Part D and increase cost sharing in Medicare by increasing deductibles. It also adds a catastrophic cap so that no senior pays above $5,500 dollars. Furthermore, the plan asks for $200 billion of additional health care savings, and offers $400 billion worth of ideas to get there."
- Congressman Looking Unlikely to Support Bloomberg's report, "The chairmen’s plan is already causing some Democrats and Republicans on the 18-member commission to balk. ... 'This is not a package that I could support,' Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission. She said any package able to win 14 votes on the panel would have to look 'very different' from the options being discussed. ... Some Republicans also expressed skepticism that the report would survive in its current form."