Deficit commission proposals out today – send 'em back (mostly)

In order to get "blue dog" support in Congress, i.e. enough votes to ensure passage, for some of his programs President Obama promised to create a deficit commission to address concerns about the federal budget, the debt and the deficit.

In order to make it a legitimate bargain, the president had to avoid trying to set the agenda and even had to appoint "blue dog" types to it.

What is a "blue dog"? There are two kinds. One is the honest Democrat who comes from a conservative district or state with a small labor or people's movement and does the best she can to get reelected.

The other is the Democrat who aligns himself or her self with Wall Street, big banks, powerful anti-worker corporations (like Wal-Mart), or other despicable interests.

These latter "blue dogs" have, or I should say had as most of them were not reelected, the biggest voice in the conservative caucus in the Democratic Party in Congress. The held a decisive voting bloc that shifted many policies to the right, i.e., in a corporate direction.

They often got first in line to put on flag lapel pins while voting away civil liebrties and for more taxpayer dollars for war, as well as to give new tax cuts to rich and cut public programs that provide basic needs for working families.

Though needed to control the majority in Congress and to provide crucial votes on certain issues, they've always managed to put a wrinkle in the best policies of the mainstream of the Democratic Party.

Budget policy has always been one of them.

The push to create a deficit commission, in this case has resulted in a lot of silliness. The commission report (which will probably be greeted with strong dissent from several of the Democratic Party members – enough to block putting the proposals on a legislative track without some fancy maneuvering) concluded that the best way to reduce the deficit was to cut taxes and to pay for it by reducing Social Security benefits.

They want to reduce tax rates for the richest Americans?? No comment on the massive $700 billion giveaway the Republicans want to give the rich this year? How about this: change tax rates for the very rich to, say, 1948 levels. And work from there. The commission's tax proposals are laughable and won't gain any political traction.

One proposal on tax rates that deserves consideration is the proposal to reduce the lowest tax bracket to eight percent. Go for it.

The commission report also proposes to raise the retirement age for Social Security over the course of the next several decades, reducing benefits for most reitrees. Now many young and middle-aged people will say, "Hey, that's not such a bad idea. People live longer. They'll want to work. I have parents who work. They enjoy it." Of course, most of the people who say this aren't 62, sick and tired of working, or just need freedom after 45 years of work, work, work.

Big problem: Social Security doesn't impact the federal deficit; it's revenues and outlays are separate. No budget money will be saved by cutting benefits. It's like forcing the neighbors to cut their food budget  so you can have more cash for going to th ebar on the weekends.

A bright spot that deserves support is the proposal to increase the income cap on Social Security payroll taxes. Currently, everything you earn over $106,800 $102,000, or so, isn't taxed. Oh wait, you don't make that much? So it's just another big benefit for very wealthy people.

A meaningful change in this cap tied permanently (or say just for the next 75 years or so) to the specific fiscal needs of the program would add signficantly to Social Security's already strong long-term financial strength.

Speaking of which, I'll bet CEOs at Lehman Brothers (and every other corporation in the world) wish they could have projected similar long-term fiscal strength for their ponzi scheme called mortgage backed securities.

A proposal to eliminate the mortgage interest rate tax break seems politically stillborn. That's the one tax break many working families benefit from. IRS data suggests that while the richest people make the biggest deductions using this tax credit, middle-income homeowners get a credit that is a significantly larger share of their income. Here's a better proposal: eliminate the tax credit for families earning $250,000 or more per year.

My prediction, as I've suggested all along, is that nothing will come out of this as there is little motivation for a political fight on this – from either party.

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