{"id":14211,"date":"2011-07-21T11:11:54","date_gmt":"2011-07-21T15:11:54","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=14211"},"modified":"2016-09-20T09:04:53","modified_gmt":"2016-09-20T13:04:53","slug":"the-grand-plan-brought-to-you-by-the-gang-of-six","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2011\/07\/21\/the-grand-plan-brought-to-you-by-the-gang-of-six\/","title":{"rendered":"The Grand Plan Brought To You By The Gang of Six"},"content":{"rendered":"

<\/em>Here is the executive summary of the plan that is being offered by the Gang of Six. What it means is anyone’s guess. Why did it take so long for them to come up with something?<\/p>\n

\"\"<\/a>Already there is a major pushback from both sides on this as the “Right” does not want tax increases and the “Left” does not want cuts to entitlements. Back to the drawing board?
\n<\/strong><\/p>\n

A BIPARTISAN PLAN TO REDUCE OUR NATION\u2018S DEFICITS EXECUTIVE SUMMARY<\/strong><\/p>\n

This bipartisan, comprehensive, and balanced plan consistent with the recommendations of the Bowles-Simpson fiscal commission that will:
\n\u201d\u00a2 Slash our nation\u2018s deficits by $3.7 trillion\/$3.6 trillion over ten years under CBO\u2018s March 2011 baseline, or $4.65 trillion\/$4.5 trillion under the original fiscal commission baseline (which used the President\u2018s 2011 budget request as the starting point for discretionary spending).
\n\u201d\u00a2 Stabilize our publicly-held debt by 2014.
\n\u201d\u00a2 Reduce our publicly-held debt to roughly 70% of our economy by 2021.
\n\u201d\u00a2 Impose unprecedented budget enforcement.<\/p>\n

A COMPREHENSIVE AND BALANCED PROPOSAL<\/strong>
\nThe plan uses a two-step legislative process: (1) an initial bill that makes immediate cuts; and (2) a process for a second bill to enact comprehensive reform and put our nation on a stable fiscal path. The plan would:
\n– Immediately implement aggressive deficit reduction down payment<\/em>
\n\u201d\u00a2 Cut deficits by $500 billion.
\n– Dramatically cut discretionary spending<\/em>
\n\u201d\u00a2 Cut nonsecurity and security discretionary spending over 10 years.
\n\u201d\u00a2 Maintain investments that encourage economic growth, strengthen the safety net for those who truly need it, and preserve a strong national defense.<\/p>\n

Carefully strengthen the solvency of our most important entitlement programs<\/strong>
\n\u201d\u00a2 Spend health care dollars more efficiently in order to strengthen Medicare and Medicaid, while maintaining the basic structure of these critical programs.
\n\u201d\u00a2 Fully pays for SGR (the \u201cdoc fix\u201d\u009d) over 10 years.<\/p>\n

Fundamentally reform our tax code<\/strong>
\n\u201d\u00a2 Reduce marginal income tax rates and abolish the $1.7 trillion Alternative Minimum Tax.
\n\u201d\u00a2 Encourage greater economic growth.
\n\u201d\u00a2 Enhance the competitiveness of American businesses and workers against global competition.
\n\u201d\u00a2 Reform spending through the tax code to eliminate investment distortions and tax gaming. \u201d\u00a2 Change the debate about taxes in America from rate levels and carve outs to competitiveness, fairness and growth.
\n\u201d\u00a2 If CBO scored this plan, it would find net tax relief of approximately $1.5 trillion.<\/p>\n

Strictly tighten the government\u2018s budget processes<\/strong>
\n\u201d\u00a2 Impose spending caps and security\/nonsecurity firewalls.
\n\u201d\u00a2 Sequester accounts at the end of the year to recoup any excessive spending by Congress.
\n\u201d\u00a2 Restrict the use of emergency designations that circumvent the spending caps.
\n\u201d\u00a2 Prevent Congress from exceeding the caps by requiring a stand-alone resolution subject to a 67-vote threshold, in order to isolate that vote to increase the deficit from any other policy items.<\/p>\n

Reform Social Security for future generations<\/strong>
\n\u201d\u00a2 Ensure 75-year solvency of Social Security and provide for a decennial review of the program to ensure it remains solvent.
\n\u201d\u00a2 Reform Social Security on a separate track, isolated from deficit reduction any savings from the program must go towards solvency.<\/p>\n

AN AGGRESSIVE PLAN THAT INVOLVES THE WHOLE CONGRESS<\/strong>
\nThe plan would be implemented through an open, aggressive two-step legislative process led by committees of jurisdiction and involving the American people by:<\/p>\n

Enacting a $500 billion down payment that would secure immediate deficit savings, while establishing a fast track process for the committees in Congress to specify further savings<\/strong>
\n\u201d\u00a2 Impose statutory discretionary spending caps through 2015.
\n\u201d\u00a2 Implement numerous budget process reforms.
\n\u201d\u00a2 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.)
\n\u201d\u00a2 Repeal the CLASS Act.
\n\u201d\u00a2 Enact concrete policy changes that lock-in additional savings, including freezing Congressional pay and selling unused federal property.
\n\u201d\u00a2 Require GAO and the Department of Labor to report to Congress on establishing a more effective unemployment insurance trigger. Enacting a comprehensive deficit reduction plan that includes discretionary and entitlement savings as well as fundamental tax reform
\n\u201d\u00a2 Require committees to report legislation within six months that would deliver real deficit savings in entitlement programs over 10 years as follows:
\n\u201d\u00a2 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.
\n\u201d\u00a2 Armed Services would find $80 billion.
\n\u201d\u00a2 Health, Education, Labor, and Pensions would find $70 billion.
\n\u201d\u00a2 Homeland Security and Government Affairs would find $65 billion.
\n\u201d\u00a2 Agriculture would find $11 billion while protecting the Supplemental Nutrition Assistance
\nProgram.
\n\u201d\u00a2 Commerce would find $11 billion.
\n\u201d\u00a2 Energy would find $6 billion and may propose additional policies to generate savings that would be applied to the infrastructure deficit or to reduce the deficit.
\n\u201d\u00a2 Judiciary would find an unspecified amount through medical malpractice reform.
\n\u201d\u00a2 Require the Finance Committee to report tax reform within six months that would deliver real deficit savings by broadening the tax base, lowering tax rates, and generating economic growth as follows:
\n\u201d\u00a2 Simplify the tax code by reducing the number of tax expenditures and reducing individual tax rates, by establishing three tax brackets with rates of 8 12 percent, 14 22 percent, and 23 29 percent.
\n\u201d\u00a2 Permanently repeal the $1.7 trillion Alternative Minimum Tax.
\n\u201d\u00a2 Tax reform must be projected to stimulate economic growth, leading to increased revenue.
\n\u201d\u00a2 Tax reform must be estimated to provide $1 trillion in additional revenue to meet plan targets and generate an additional $133 billion by 2021, without raising the federal gas tax, to ensure improved solvency for the Highway Trust Fund.
\n\u201d\u00a2 If CBO scored this plan, it would find net tax relief of approximately $1.5 trillion.
\n\u201d\u00a2 To the extent future Congresses find that the dynamic effects of tax reform result in additional revenue beyond these targets, this revenue must go to additional rate reductions and deficit reduction, not to new spending.
\n\u201d\u00a2 Reform, not eliminate, tax expenditures for health, charitable giving, homeownership, and retirement, and retain support for low-income workers and families.
\n\u201d\u00a2 Retain the Earned Income Tax Credit and the Child Tax Credit, or provide at least the same level of support for qualified beneficiaries.
\n\u201d\u00a2 Maintain or improve the progressivity of the tax code.
\n\u201d\u00a2 Establish a single corporate tax rate between 23 percent and 29 percent, raise as much revenue as the current corporate tax system, and move to a competitive territorial tax system.
\n\u201d\u00a2 Require the Budget Committee to report legislation within six months that would:
\n\u201d\u00a2 Extend discretionary caps and enforcement mechanisms through 2021.
\n\u201d\u00a2 Ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has not stabilized.
\n\u201d\u00a2 Review total federal health care spending starting in 2020 with a target of holding growth to GDP plus one percent per beneficiary and require action by Congress and the President if exceeded.
\n\u201d\u00a2 Achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide.
\n\u201d\u00a2 Create a working group to provide updated budget concepts for CBO and OMB.
\n\u201d\u00a2 Provide expedited floor consideration for a consolidated bill meeting these instructions:
\n\u201d\u00a2 If any committee fails to report entitlement program savings, impose across the board cuts to programs in that committee\u2018s jurisdiction as necessary to achieve the required savings. To protect programs that benefit low income families, exempt from across the board cuts those most in need.
\n\u201d\u00a2 Allow a group of at least five senators from each party to introduce a resolution in lieu of the non-reporting committee.
\n\u201d\u00a2 If a resolution receives 60 votes on the floor, those recommendations will be added to the comprehensive bill.
\n\u201d\u00a2 If the Senate does not agree to those recommendations, the comprehensive bill cannot come to the floor under the special procedures established in the first (down payment) bill.
\n\u201d\u00a2 Bar substitute floor amendments that upset the revenue\/spending balance or any amendments that make the deficit worse, but place no other limits on debate or the substance of amendments.
\n\u201d\u00a2 Allow the Majority Leader and Minority Leader to limit debate and the number of amendments, or impose other substantive restrictions by agreement, so that the Leaders
\ncan manage the bill with a process that satisfies 60 Senators and the process cannot be held up by a small group on either side. If the Leaders cannot agree, the bill is considered under the regular order.
\n\u201d\u00a2 Hold any such comprehensive bill that receives 60 votes at the desk pending consideration of the Social Security bill.<\/p>\n

Enacting Social Security reform if the comprehensive deficit reduction plan has passed<\/strong>
\n\u201d\u00a2 Consider Social Security reform, if and only if the comprehensive deficit reduction bill has already received 60 votes.
\n\u201d\u00a2 Reform must ensure 75-year solvency of the program and provide for a decennial review to ensure it remains solvent. Any savings from the program must go towards solvency, not deficit reduction.
\n\u201d\u00a2 If Finance fails to report Social Security reform meeting the instructions, allow a group of at least five senators from each party to introduce a resolution with recommendations that meet the committee\u2018s instructions.
\n\u201d\u00a2 Bar substitute amendments that worsen the solvency of Social Security.
\n\u201d\u00a2 Combine any qualifying Social Security reform bill that receives 60 votes on final passage to the comprehensive bill at the desk before being sent to the House as a single bill.
\n\u201d\u00a2 Vitiate the vote on the deficit-reduction bill if the Social Security reform bill does not receive 60 votes.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here is the executive summary of the plan that is being offered by the Gang of Six. What it means is anyone’s guess. Why did it take so long for them to come up with something? Already there is a major pushback from both sides on this as the “Right” does not want tax increases […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12],"tags":[481,483],"class_list":["post-14211","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","tag-economy","tag-markets","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/14211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=14211"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/14211\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=14211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=14211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=14211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}