Motley Moose – Archive

Since 2008 – Progress Through Politics

President's Debt Commission – The Final Report (Part 4)

The Debt Commission Report, formally The National Commission on Fiscal Responsibility and Reform, has been subject to a lot of derision on the left.  It has been seen as a waste of time at best, or an attack on Democratic core principles at the worst.

This is the fourth installment looking section by section of the report.

Here’s the link to the first installment:…

Here’s the link to the 2nd installment:…

Here’s the link to the 3rd installment:…

Also, here is the link to the actual report:


Now back to the report:

Well we get to the part of the report that they decide that it is time to talk about economic recovery.  Now how they decided that this was appropriate for the debt commission to discuss, but I guess with the need for deficit spending to restart the economy it’s as good a topic as any.  So here’s what they had to say in it’s entirely about economic recovery:

Fostering an Economic Recovery

The Government Accountability Office has said that we could have double-digit growth for a decade and still not grow out of the current fiscal situation. At the same time, we cannot get out of this fiscal hole without sustained economic growth. According to the Office of Management and Budget, a one-time 1 percent decrease in GDP would increase the deficit by more than $600 billion over the course of the decade; if annual growth were 1 percent lower every year, the deficit would be over $3 trillion larger. A plan to reduce the deficit must therefore promote economic growth and not undermine the economic recovery. Our plan would accomplish these goals in at least four ways:

Reduce the deficit gradually. In order to avoid shocking the fragile economy, the Commission recommends waiting until 2012 to begin enacting programmatic spending cuts, and waiting until fiscal year 2013 before making large nominal cuts. In addition, revenue changes would not begin until calendar year 2013, after spending cuts are already well underway.

Put in place a credible plan to stabilize the debt. A number of economists have argued that putting into place a credible plan to reduce future deficits can have a positive effect on the economy. This so-called “announcement effect” could help to prevent interest rate increases and also mitigate uncertainty among individuals and businesses. In addition, stabilizing the debt will improve the country’s long-term growth prospects by reducing the “crowd out” of private investment and by forestalling a potential fiscal crisis.

Consider a temporary payroll tax holiday in FY 2011. In order to spur short-term economic growth, the Domenici-Rivlin Bipartisan Policy Center Commission recommended a temporary payroll tax holiday in 2011. Assuming it is accompanied by sufficient future deficit reduction, Congress should consider a temporary suspension of one side of the Social Security payroll tax, financed by transfers from general revenue. Though this would cost $50-100 billion in lost revenue (depending on the design), CBO estimates that a payroll tax holiday of this magnitude would result in significant short-term economic growth and job creation.

Implement pro-growth tax and spending policies. In designing its proposal, the Commission made growth and competitiveness a priority. For example, our discretionary plan maintains important funding for education, infrastructure, and high-value R&D, and establishes a Cut-and-Invest Committee to continue to reprioritize spending toward investment. Our tax plan, meanwhile, cuts corporate and individual rates significantly, while simplifying the code, broadening the base, and lowering the deficit. It also makes us more globally competitive by moving to a territorial tax system like those of our international partners.

Basically, they are saying that their recommendations will not derail economic activity.  Plus side, the President’s tax deal included the tax holiday proposed by the commission.  There aren’t any new proposals here, I guess they felt the need to say there is no need to worry fixing the deficit won’t affected the nation’s economic recovery.

IV. Other Mandatory Policies

This is the section where they are going to address programs with mandatory spending.  They argue that they need to look at everything and these programs because they are mandatory don’t receive the scrutiny of oversight other programs do.

So, here are some of their proposals:

Protect the disadvantaged. About 20 percent of mandatory spending is devoted to income support programs for the most disadvantaged.

This is obvious a good idea.  We need to protect those that are the most vulnerable to the ups and downs of the economy.

End wasteful spending.

They are talking about wasteful subsidies.  They don’t provide any examples, but I would start with the oil company subsidies.  🙂

Look to the private sector.

This appears to be a call for finding best practices, not to privatize.

RECOMMENDATION 4.1: REVIEW AND REFORM FEDERAL WORKFORCE RETIREMENT PROGRAMS. Create a federal workforce entitlement task force to re-evaluate civil service and military health and retirement programs and recommend savings of $70 billion over ten years.

Their claim is that this retirement programs are out of sync with the private sector.  This is what they want to do:

Use the highest five years of earnings to calculate civil service pension benefits for new retirees (CSRS and FERS), rather than the highest three years prescribed under current law, to bring the benefit calculation in line with the private sector standard.

(Saves $500 million in 2015, $5 billion through 2020)

Defer Cost of Living Adjustment (COLA) for retirees in the current system until age 62, including for civilian and military retirees who retire well before a conventional retirement age. In place of annual increases, provide a one-time catch-up adjustment at age 62 to increase the benefit to the amount that would have been payable had full COLAs been in effect.

(Saves $5 billion in 2015, $17 billion through 2020)

Adjust the ratio of employer/employee contributions to federal employee pension plans to equalize contributions.

(Saves $4 billion in 2015, $51 billion through 2020)

I think the federal programs are probably out of line with the private sector, but that is a deficit in the private sector and not in the public sector.  I see these proposals of another attack on the middle class.

RECOMMENDATION 4.2: REDUCE AGRICULTURE PROGRAM SPENDING THROUGH 2020. Reduce net spending on mandatory agriculture programs by $10 billion from 2012 through 2020 with additional savings to fund an extension of the agriculture disaster fund, and allow the Agriculture Committees to reallocate funds as necessary according to their priorities in the upcoming Farm Bill.

(Saves $1 billion in 2015, $10 billion through 2020)

Basically, reduce farm subsidies and use some of the money to pay debt and the rest to create a disaster fund.  I think it’s time for us to move away from farm subsidies since they have just turned into a corporate giveaway instead of actually helping small farmers.

RECOMMENDATION 4.3: ELIMINATE IN-SCHOOL SUBSIDIES IN FEDERAL STUDENT LOAN PROGRAMS. Eliminate income-based subsidies for federal student loan borrowers and better target hardship relief for loan repayment.

(Saves $5 billion in 2015, $43 billion through 2020)

This is
ridiculous, they say that students don’t care, but reducing interest lowers the amount owed at the end.  Their is a circular argument in this section that just doesn’t make any sense.


This is a good idea.  It will allow the PBGB the right to charge employers higher premiums to ensure that the program doesn’t need to be bailed out by the federal government.


Apparently, they aren’t being paid currently to reclaim mines but are going to states that have already reclaimed their mines.  This is definitely a waste of money and should be eliminated.


Basically, in 1993 Congress gave the FCC the authority to auction off parts of the spectrum, but that’s set to expire in 2012.  They recommend extending that permanently, as it raises government revenue.


This is for licensing and other fees.  It seems a little petty, but it’s probably a good idea.


Government electricity production by law is sold at cost.  They propose to change that to market rates.  This is a good idea.


Apparently the TVA’s rates don’t cover it’s costs or debts.  They want to raise those rates to cover, so it isn’t subsidized by the taxpayer.  This is one I disagree with, the TVA covers a low income area and they can’t afford to pay higher rates.


This is probably a good idea.  This will allow the Post Office to make sure it stays autonomous and doesn’t rely on the taxpayer for further bailouts.


So, the next section is Social Security.  This is getting exciting.


  1. A couple of items that caught my attention – in-school interest subsidies and Post Office reform.

    Adding interest to student loans while the student is still in school will dramatically increase their overall payment schedule. We, as a nation, should be doing more to reduce the cost of higher education, not increasing it. I can’t support this.

    The Post Office (USPS) is a service to the people of this country. It has great benefits for everyone from individuals to corporations. Those benefits come at a cost. While I agree that the USPS could benefit from reforms, I don’t agree that it should not be subsidized by taxpayers.

    This is one of my favorite points to make with conservatives who claim to be constitutional advocates. When they start carrying on about privatizing governmental services, I ask if that includes the Post Office. Most of them are in favor of doing away with it. I then point out that the Post Office is actually established by the Constitution. This causes some serious mental anguish. It takes some real mental gymnastics to justify privatizing gov’t services based on Constitutional arguments when that service is mandated in the Constitution.

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