Solutions

When we started this site in 2009 there was little talk of the deficit and no discussion of solutions.  Now it seems that Washington is awash in deficit talk and we’ve actually seen some good solutions role out.  Though we think a Millennial Solution needs to go further, here are some of the more notable plans that have been put forth.

-           President Obama’s New Budget Framework

In response to what we believe were calls for the president to show leadership on debt reduction President Obama gave a speech in April to outline his guiding principles for deficit reduction.  We want to note that this not actually a plan just a framework for how the president sees deficit reduction. Some of the highlights of his speech included:

• Calling for $4 trillion in deficit reduction over the next 12 years
• Unspecified discretionary spending cuts
• Reduce Medicare costs by strengthening the Independent Payment Advisory Board who is tasked with controlling the growth of the program.  They would limit growth per beneficiary from GDP plus one percent currently, to GDP plus .5 percent.
• A debt fail safe, a key feature of the plan.  Where Congress would agree on targets to reduce the deficit as a percentage of GDP and if no plan is put in place by 2014 a combination of across the board spending cuts and tax increases would bring us to that target.

The Committee for Responsible Federal Budget has a good analysis of the framework.  It can be viewed here.

-           House Republican’s Path to Prosperity

Authored by Rep. Paul Ryan (R-Wis) this plan lays out a GOP vision for putting America on the correct fiscal path as well as the ways they believe can grow the economy.  It was the first full plan to be voted on in the house and passed mostly along party lines, though most doubt that it will make it through the Senate.  Key features include:

• Cuts $5.8 trillion in spending from our current path over the next 10 years.
• Eliminates duplicate programs
• Defunds the president’s healthcare law
• Changes Medicare from a coverage system to a payment system in 2022.  Instead of covering the cost of care Ryan proposes that individuals would be given a set amount of money to purchase government approved insurance plans

-          President Obama’s Bipartisan Fiscal Commission

When the president signed an executive order on February 18, 2010, no one knew what to expect from the commission tasked with tackling the nation’s trillion dollar deficits.  A panel that was co-chaired by former Clinton Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson also consisted of 6 senators, 6 house members and 4 people from outside Congress.  The members of Congress were to be split among Republicans and Democrats.  On December 1, 2010 the commission released it much anticipated report titled “The Moment of Truth.”  The plan received a vote two days later and unfortunately only received 11  of the 14 votes needed to be sent to Congress for a vote.

While the report did not make it to the floor of Congress the commission completed its mission and produced a serious solution to our nation’s fiscal problems.  We commend the commission for laying out a plan of that shows what is really needed to bring our nations balance sheet in order.  Here are some of the highlights from the plan:

• Nearly $4 trillion in reduction through 2020
• Bring revenue and spending into line at 21%
• Reduce tax rates, broaden the base, simplify the tax code, reduce tax expenditures and reform the corporate tax code
• Health Care reform
• Make Social Security soluble over the long-term by raising the retirement age to 68 in 2050 and 69 by 2075 and making the retirement benefit formula more progressive.

These are just a few of the many pieces of the plan, Click here to go to the commission’s website

-          A Roadmap for America’s Future

Congressman Paul Ryan (R-WI), is one of the few members of Congress to propose a comprehensive plan to deal with our debt.  Click here to see his website. Ryan proposes reforms in taxes, healthcare, Medicare and Social Security.

-           Restoring America’s Future

One of the few plans that also takes growth and job creation into account, though it does not make specific recommendations on where to create growth.  The plan was developed by the Debt Reduction Taskforce at the Bipartisan Policy Center.  The taskforce was chaired by the former Chairman of the Senate Budget Committee Pete Domenici and former Director of Office of Management and Budget Alice Rivlin.  Here are some of the plan highlights:

• Enact a payroll tax holiday for 2011 on the taxes that employers and employees pay into Social Security.  The Congressional Budget Office estimates this could create between 2.5 and 7 million new jobs.
• Stabilize the debt to 60% of GDP by 2020
• Balance the budget (excluding interest) by 2014
• Control rising healthcare costs
• Freeze domestic discretionary and defense spending for 4 and 5 years respectively

Click here to see the full plan