Deficit Reduction Plan Resource Center
American Action Forum: “Balanced” (Released November 2012)
Defense: Increases defense spending compared to current law, but reforms spending to constrain growth in civilian and military health costs.
Debt/Deficit: Balances the budget by 2031. Repeals. Reduces Debt-to-GDP ratio to 60.2 percent by 2031. Reduces Debt-to-GDP ratio to 40.1 by 2037.
Medicare: Repeals the president’s health care law.
Social Security: Avoids sharp benefit reductions in Social Security reform. Use a gradual reform that slows the growth in promised benefits instead of cutting them outright.
Taxes: Lowers corporate and income taxes and establishes a progressive consumption tax. Establishes three tax brackets and increases the gas tax.
Government Spending: Repeal president’s heath care law.
Bipartisan Policy Center (Domenici/Rivlin plan): “Restoring America’s Future” (Released November 2010)
Defense: Freezes defense spending for 5 years and capped at the growth rate of the economy thereafter.
Debt/Deficit: Balances the primary budget in 2014. Stabilizes the Debt-to-GDP ratio below 60 percent by 2020.
Medicare: Gradually raises Medicare premiums for doctors’ visits from 25 to 35 percent of total program costs over five years. Transition Medicare to a “premium support”
program in 2018. Uses increased buying power to increase rebates from pharmaceutical companies.
Social Security: Raises the amount of wages subject to payroll taxes over the next 38 years and the annual cost-of-living-adjustments for benefits to more accurately reflect inflation. Slightly reduces the growth in benefits for approximately the top 25 percent of beneficiaries. In 2023, begins adjusting the benefit formula to account for increased life expectancy. Covers newly-hired state/local government workers under Social Security beginning in 2020.
Taxes: Extends payroll tax holiday one year. Broadens the tax base, reduces tax rates. Establishes a two income tax rate bracket system (15 and 27 percent). Cuts the top corporate tax rate to 27 percent from 35 percent. Establishes a new 6.5 percent Debt Reduction Sales Tax.
Government Spending: Extends payroll tax holiday one year. Broadens the tax base, reduces tax rates. Establishes a two income tax rate bracket system (15 and 27 percent). Cuts the top corporate tax rate to 27 percent from 35 percent. Establishes a new 6.5 percent Debt Reduction Sales Tax.
National Commission on Fiscal Responsibility and Reform (Bowles-Simpson plan): “Moment of Truth” (Released December 2010)
Defense: Cuts defense spending and puts a cap on security spending.
Debt/Deficit: Reduce the deficit to 2.3% of GDP by 2015. Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035. Dedicate $80 billion to deficit reduction in 2015 and $180 billion in 2020.
Medicare: Reform the Medicare formula for calculating physician’s payments. Reforms the CLASS Act. Reforms Medicare cost-sharing rules Establishes a global budget for total federal health care costs and limits the growth to GDP plus 1 percent.
Social Security: Moves to a more progressive benefit formula that slows future benefit growth, particularly for higher earners. The Commission recommends gradually transitioning to a four-bracket formula by breaking the middle bracket in two at the median income level ($38,000 in 2010, $63,000 in 2050), and then gradually changing the replacement rates. Creates a new special minimum benefit which provides full-career (30-year) minimum wage workers with a benefit equivalent to 125 percent of the poverty line in 2017 and wage-indexed thereafter. Gradually increases early and full retirement ages, based on life expectancy.
Taxes: Dedicates a 15-cent per gallon increase in the gas tax to transportation funding. relies on “zero-base budgeting” by eliminating all income tax expenditures (but maintaining the current payroll tax base, which should be modified only in the context of Social Security reform), and then using the revenue to lower rates and reduce deficits. Cuts rates across the board.
Government Spending: Caps discretionary spending through 2020. Holds spending in 2012 equal to or lower than spending in 2011, and return spending to precrisis 2008 levels in real terms in 2013. Limits future spending growth to half the projected inflation rate through 2020. Caps revenue at 21 percent of GDP and gets spending below 22 percent and eventually to 21 percent The Commission’s proposal would reduce the budgets for Congress and the White House by 15 percent. This proposal will save $800 million in 2015. Three-year freeze on federal pay. Cuts the government workforce by 10 percent.
Center for American Progress (Released December 2012)
Defense: Cuts $100 billion in additional defense spending.
Debt/Deficit: Goal should be to reduce deficit to stabilize debt-to-GDP by the medium term.
Medicare: Finds $385 billion in additional savings from federal health care programs, mainly from Medicare. Medicare and Medicaid should adopt market-based prices, allowing manufacturers and suppliers to compete to offer the best prices. Programs should pay a fixed amount for a bundle of services or for all of a patient’s care. “Accountable care states” that keep overall health care spending below a global target would be rewarded with bonus payments.
Social Security: No detail provided
Taxes: Tax reform would raise $1.8 trillion in the next 10 years. Households making less than $100,000 would pay a little less than they do now, those making between $100,000 and $250,000 would see a small increase, and the tax hikes up to $500,000 would be small. A top marginal tax rate for the personal income tax of 39.6. A top marginal tax rate of 28 percent on capital gains. Converts tax deductions to tax credits. Closes tax loopholes. Simplifies the tax system and repeals the Alternative Minimum Tax.
Government Spending: Spending cuts would reduce federal spending from a projected level of more than 24 percent of GDP in 2022 to about 22.7 percent of GDP. Would generate another $500 billion in reduced spending on interest payments on the debt for total deficit reduction over 10 years of $4.1 trillion.
Economic Policy Institute: “Prosperity Economics” (Released July 2012)
Defense: Reduce defense spending at least to the levels of before the wars in Iraq and Afghanistan.
Debt/Deficit: Suggest spending and deficits are not the number one problem in the U.S.
Medicare: Build on the Affordable Care Act by adding a public option with the clout to push back against consolidated providers and insurers. Federal financing of Medicaid should be increased and automatically adjusted upward when unemployment in a state is high.
Social Security: Strengthen Social Security by substantially raising or completely eliminating the cap on earnings subject to tax and by subjecting asset income to tax. Replace 401(k)s with a simple, universal mandatory public-private plan. Cap the value of itemized individual tax deductions and convert the deduction for dependent care into a refundable credit. Maintain the 2009 expansions of the Earned Income Tax Credit.
Taxes: End the Bush tax cuts for high-earners. Create new tax brackets for the highest earners, restoring progressivity at the top of the tax code.
Government Spending: Invest $250 billion per year in infrastructure over the next six years.
The Heritage Foundation: “Saving the American Dream (Released May 2011)
Defense: Find waste and inefficiency in defense spending but use ethat money to meet defense needs.
Debt/Deficit: Lower debt to GDP to 30 percent by 2035.
Medicare: Reduces subsidies and phases them out for upper-income enrollees. A new income-related premium for hospital visits is phased in to cover the full cost of Part A services during the transition and to cover any deficit in the Hospital Insurance trust fund. Changes copayments. Raises the premiums for Medicare Parts Part B and Part D. Eliminates restrictions on doctor-patient contracting.
Social Security: Gradually return Social Security to it’s original purpose of guaranteeing seniors freedom from fear of poverty and assuring a decent retirement income. Create greater incentives for workers of all income levels to save more for retirement. The Social Security retirement ages will be raised gradually and then indexed to life expectancy.
Taxes: The tax system should be capped at collecting no more than 18.5 percent of GDP. For individuals, the current system will be replaced with a new flat-rate tax applied to income after deducting all savings. Taxable income will be reduced by the net amount contributed to savings, and savings will be taxable only when spent.
Government Spending: Changes the budget process to impose enforceable caps to reduce total federal spending to 18.5 percent of GDP by 2021 (including entitlement programs) and then keep spending at that level. Also caps non-defense discretionary spending at 2.0 percent of GDP.
Administration’s Proposal (December 2012)
Defense: No detail provided.
Debt/Deficit: Cuts the deficit by $250 billion through unspecified spending cuts and newly imposed fees. Would allow the president to obtain increaes in the debt limit without approval by Congress.
Medicare: Cuts $350 billion over 10 years from Medicare and Medicaid by curbing costs on health care providers and lowering Medicare drug costs.
Social Security: No detail provided.
Taxes: Increases taxes by $1.6 trillion over 10 years. Raises tax rates on individuals at the top income bracket. Renews the payroll tax holiday. Return estate tax to 2009 levels. Increases taxes on capital gains and dividends.
Government Spending: $200 billion in spending for economic stimulus (includes the extension of the payroll tax holiday and jobless benefits).
House Republican Proposal (December 2012)
Defense: No detail provided.
Debt/Deficit: Cuts the deficit by $300 billion through unspecified cuts and fees. Would cut another $300 billion over the decade from agency operating budgets. Keeps the requirement of congressional approval to raise the debt limit. $4.6 trillion in deficit reductions over the next 10 years.
Medicare: Cuts $600 billion over 10 years by cuts to healthcare providers. Increaes the eligibility age for Medicare and higher costs for higher-income Medicare beneficiaries.
Social Security: No detail provided.
Taxes: Increases taxes by $800 billion over 10 years by reforming the tax code and eliminating loopholes. Extends all expiring Bush-era tax cuts, permits the payroll tax to expire.
Government Spending: No detail provided.
Administration’s Proposal #2 (December 2012)
Defense: No detail given
Debt/Deficit: Raise the nation’s borrowing limit for two years.
Medicare: No detail given.
Social Security: Slow growth by using a different inflation formula to calculate cost-of-living increases.
Taxes: Allow Bush-era tax rates to expire for households with incomes over $400,000 in annual income. Permanent extension of certain tax breaks scheduled to expire at the end of the year. Will end push to extend payroll tax holiday.
Government Spending: Increased spending for infrastructure, extension of emergency unemployment insurance.
House Republican Proposal #2 (December 2012)
Defense: No detail provided.
Debt/Deficit: Increases in the debt ceiling as part of the deal, only if it is matched by comparable spending cuts
Medicare: Calls for cutting about $1 trillion from spending, to come in part from entitlement programs such as Medicare and Social Security
Social Security: Uses new formula to determine cost-of-living increases
Taxes: Calls for raising $1 trillion in tax revenues over 10 years, up from $800 billion previously proposed. Calls for raising $1 trillion in tax revenues over 10 years, up from $800 billion previously proposed.
Government Spending: Calls for cutting about $1 trillion from spending, to come in part from entitlement programs such as Medicare and Social Security