Saturday, July 9, 2011

Obama-GOP deal on deficit/debt—Likely components

Bob Cusack at The Hill has a recent post on what might be included in any Obama/GOP deal to cut the deficit and raise the debt ceiling.  Here is a brief rundown according to Cusack.  Read Cusack’s original post here for source of opposition to these proposals and why they may not be feasible.

Here are items that might end up in the final deal, if one is reached:

Deal would call for cutting deficit by $4 trillion over 10 years.

  • Medicare may get power to negotiate price of drugs.
  • Means testing may become part of Medicare, with lower benefits for wealthy beneficiaries.
  • Medicaid cuts are likely along with a possible change to block-grant program—The real fight will be over keeping cuts from completely gutting the program, not preventing cuts totally.
  • Major changes are likely with Social Security, particularly a switched to the “chained” CPI for calculating Cost-of-Living increases (COLA).
  • A number of “special interest” tax breaks such as those on ethanol, oil and gas, corporate jets and yachts may be eliminated.
  • Some kind of increase in “user fees” for government services are likely.
  • Some effort may be made to address the alternative minimum tax (AMT) issue.
  • The corporate tax rate may be lowered.
  • Defense spending will likely be cut.
  • Farm subsidies may be cut drastically.
  • Financial aid for colleges may be cut.
  • Pensions for federal workers may be cut.
  • Mortgage deduction for second homes may be eliminated.
  • A repatriation proposal to allow companies to bring foreign-based income back to the U.S. at a reduced tax rate may be included.
  • President may be required to submit a budget every other year at the beginning of the first session of Congress.
  • Eliminating Bush tax cuts probably WILL NOT be included.
  • Balanced Budget Amendment probably WILL NOT be included since it could not pass anyway.

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