Now, let's take a look at the "immediate" section of the plan:
- Impose statutory discretionary spending caps through 2015.
- Implement numerous budget process reforms.
- Shift to the chained-CPI (a more accurate measure of inflation) government-wide starting in 2012, along with the following specifications for Social Security: (1) exempt SSI from the shift for five years, and then phase in the shift over the next five years; and (2) provide a minimum benefit equal to 125% of the poverty line for five years. (According to CBO, the shift to chained-CPI would result in the annual adjustment growing, on average, about 0.25 percentage points per year slower than the current CPI.)
- Repeal the CLASS Act.
- Enact concrete policy changes that lock-in additional savings, including freezing Congressional pay and selling unused federal property.
- Require GAO and the Department of Labor to report to Congress on establishing a more effective unemployment insurance trigger.
Do you see any actual cuts there? Any at all? For every dollar we are taking in, we are spending $1.50 and all these guys can come up with are caps on spending and changing the way CPI is calculated (which might not even reduce the deficit if inflation is higher than current estimates)? This is such a non-serious festering turd of a cost cutting plan.
And now let's go to the "comprehensive" section of the plan which begins with:
- Require committees to report legislation within six months that would deliver real deficit savings in entitlement programs over 10 years
- Finance would permanently reform or replace the Medicare Sustainable Growth Rate formula ($298 billion) and fully offset the cost with health savings, would find an additional $202 billion/$85 billion in health savings, and would maintain the essential health care services that the poor and elderly rely upon.
- Reform, not eliminate, tax expenditures for health, charitable giving, homeownership, and retirement, and retain support for low-income workers and families.
I also don't understand the need to "reform" charitable giving deductions. Isn't giving to charity a good thing? Does the government really think it has better use for that money? That it somehow is more efficient? Don't make me laugh.
On the mortgage interest deduction, I do understand that it is a big line item but reforming it or getting rid of part of it isn't the answer. Mortgage interest has been deductible since the first federal income tax law in 1913. Over the course of the last almost 100 years, it's made houses at the same price point more affordable than they would otherwise be, hence acting as a tailwind on housing prices. Basically, because buyers could afford to pay more, sellers have generally sold their houses for more. So I don't think any of us today are actually been benefiting from it the way we think we have. If it were never enacted, real estate prices would be lower across the board, probably putting your monthly payment around where it is now, with the deduction. So the house you might have paid $400,000 for, would actually have been $300,000 without the deduction. So while we probably have not benefited from it, cutting it would have a disastrous impact. Housing prices would immediately take a hit as they would become less affordable. This would send many homeowners underwater or further underwater, making any sort of refinancing impossible. Also, banks still have quite a bit of mortgage debt on their books, so any change in the mortgage interest deduction would have an immediate impact on banks and would probably cause ANOTHER banking crisis. Seriously, it's amazing how these politicians don't think things through. Now on to the next and final "reform" that I want to comment on:
- Maintain or improve the progressivity of the tax code.
As you can see, the plan is a completely idiotic monstrosity that probably will end up doing more harm than good. Luckily, it's only an outline at this point and has just about zero chance of going anywhere (hopefully).