Where is the US economy headed?

The co-chairmen of the President's commission to reduce the federal deficit are out today with a draft of a plan. Both Erskine Bowles (D) and former Senator Alan Simpson (R) acknowledge that the plan is unlikely to get the needed 14 votes on the 18 member commission. That is an understatement and Simpson, who is still a witty guy, suggested he and Bowles are likely to enter the Witness Protection Program.
Some of the ideas:
1) Freeze pay for civilian federal employees for 3 years
2) Cut the number of civilian federal employees by 10%
3) Raise the gasoline tax by 15 cents a gallon
4) Eliminate earmarks in legislation
5) Revise the tax code to, amongst other things, eliminate the mortgage interest deduction
6) Also eliminate the deduction businesses get for providing employees with health insurance
In conjunction with 5) and 6)-
7) Reduce income tax rates from 10% to 8% for people in the lowest bracket; from 35% to 23% for those in the highest and from 35% to 26% for corporations.
In addition, Erskine and Bowles address projected shortfalls in the Social Security system's budget (not included in the federal deficit):
1) Change the formula for calculating the COLA on future retirees
2) Reduce SS benefits to all but the lowest earning future retirees
3) Raise the threshold of income subject to SS deductions
4) Raise the retirement age to 68 in 2050 and 69 in 2075.

I found the NY Times article to be the most useful of the ones I looked at. I linked to it from the Real Clear Politics site which I left over from the election. I suspect there are other things included in the draft that I haven't found yet.

November 10, 2010, 1:43 pm
Unserious People

OK, let’s say goodbye to the deficit commission. If you’re sincerely worried about the US fiscal future — and there’s good reason to be — you don’t propose a plan that involves large cuts in income taxes. Even if those cuts are offset by supposed elimination of tax breaks elsewhere, balancing the budget is hard enough without giving out a lot of goodies — goodies that fairly obviously, even without having the details, would go largely to the very affluent.

I mean, what’s this about? There is no — zero — evidence that income taxes at current rates are an important drag on growth.

Oh, and they’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.

Still, I guess this is what it takes to get compromise, if by compromise you mean something the center-right and the hard right can agree on.

• A married couple without children and an annual income of $80,000 would have an added $221 taken from their paycheck every two weeks.

For a typical single filer with adjusted gross income of around $40,000, it might be about $400 a year. At $80,000, that rises to about $1,600.

How about married couples filing jointly? They'd get hit with both higher tax rates and a lower standard deduction. (It was raised in 2001.) A couple earning $80,000 a year in adjusted gross income might pay about $2,200 extra. A married couple on $160,000 a year? Maybe $5,500 extra.

Found it. You'll have to take it up with H&R Block.

Quote:

For a married couple with an income of $80,000, that would drain an extra $221.48 in withholding from a semi-monthly paycheck, according to calculations by the Tax Institute at H&R Block. Married individuals earning $240,000 a year would lose an additional $557.78 to withholding in a single semi-monthly paycheck. The Tax Institute at H&R Block calculated federal tax rates for single-income earners and married taxpayers without children. Source

Also, in my calculations above for the married couple earning $240,000, I failed to double the $558 for semi-monthly paychecks against monthly earnings. If the numbers in the Bloomberg article are correct then both income levels will see an 8% cut in discretionary income.

I saw this as well. I believe that this is what is usually referred to as a 'non-starter.' Which is to say that this plan, and most of the individual elements of the plan, has a zero percent chance of going into effect.

It's pure bullshit, from bottom to top. Not a serious plan for addressing the deficit or the debt. It can easily be countered by this: allow the Bush tax cuts to expire, and in ten years, we have zero deficit and are paying down the debt, without cutting ANYTHING else.

God damn, this **** just makes me so angry. People in this country want everything to be free, and I'm not talking about the lower earners.
Cycloptichorn

ftp://ftp.bls.gov/pub/suppl/empsit.cpseea1.txt
Year……TOTAL US CIVILIAN EMPLOYMENT
1980……………..99 million [CARTER]
1988…………… 115 million [REAGAN]
1992…………….118 million [BUSH41]
2000……………137 million [CLINTON]
2007………..….146 million [BUSH43]
2008………….. 145 million [BUSH43]
2009,……….....140 million [OBAMA]
2010.……………139 million [OBAMA] (as of September 2010 and not final year of term)

Year.…….PERCENT OF CIVILIAN POPULATION EMPLOYED
1980…………………………………….59.2 [CARTER]
1988…………………………………….62.3 [REAGAN]
1992…………………………………….61.5 [BUSH41]
2000…………………………………….64.4 [CLINTON]
2007…………………………………….63.0 [BUSH43]
2008…………………………………….62.2 [BUSH43]
2009…………………………………….59.3 [OBAMA]
2010…………………………………….58.5 [OBAMA] (as of September 2010 and not final year of term)

Wait. What?

Proposals that will fix the problem that are unpalatable to both the left and right?

Why does it not surprise me that I'm willing to try all of these things in an effort to fix the problems? Oh, yeah.... I'm a centrist.

I'd be willing to vote in each and every one of those "tough love" or "tough sh!t" proposals and see how they roll.

nope. I think the tax burden on the lower incomes is too much to tolerate. I'm not sure where the cutoff should be (less than $150,000, $200,000, $250,000), but I tend to think that the lower levels aren't reasonable and the upper levels are simply too high.

I'm not looking for something that's politically palatable, cyclo, I just want it to work.