Hot-button cuts proposed by deficit panel

Social Security is among the targets in deficit panel's plan.

Associated PressNovember 11, 2010 

  • The deficit-reduction plan proposes:

    Increasing the retirement age for full Social Security benefits to 69 by 2075.

    Reducing annual increases in Social Security benefits.

    Eliminating the current tax deduction that homeowners receive for the interest they pay on their mortgages.

    Limiting or eliminating the tax-free status of employer-provided health benefits.

    Associated Press

— In a politically incendiary plan, the bipartisan leaders of President Barack Obama's deficit commission on Wednesday proposed curbs in Social Security benefits, deep reductions in federal spending and higher taxes for millions of Americans to stem a flood of red ink that they said threatens the nation's future.

The White House responded coolly, some leading lawmakers less so, to proposals that target government programs long considered all but sacred. Besides Social Security, Medicare spending would be curtailed, as well as tax breaks for many health care plans. The Pentagon's budget also would take a hit in a plan designed to cut total deficits by as much as $4 trillion over the next decade.

The plan arrived exactly one week after elections that featured strong voter demands for economic change in Washington. But criticism was immediate from advocacy groups on the left and, to some extent, the right at the start of the post-election debate on painful steps necessary to rein in out-of-control deficits.

The plan would gradually increase the retirement age for full Social Security benefits - to 69 by 2075 - and current recipients would receive smaller-than-anticipated annual increases. Equally controversial, it would eliminate the current tax deduction that homeowners receive for the interest they pay on their mortgages.

No one is expecting quick action on any of the plan's pieces. Proposed cuts to Social Security and Medicare are making liberals recoil. And conservative Republicans balk at options suggested for raising taxes. The plan also calls for cuts in farm subsidies, foreign aid and the Pentagon's budget.

The document was released by Democrat Erskine Bowles of Charlotte, UNC system president and a former Clinton White House chief; and Republican Alan Simpson, a former senator from Wyoming.

Acknowledging the controversy involved, Simpson quipped to reporters: "We'll both be in a witness protection program when this is all over, so look us up." Said Bowles: "This is a starting point."

Controversial or not, Bowles said serious action was demanded. He declared, "This debt is like a cancer that will truly destroy this country from within if we don't fix it."

The government reported separately Wednesday that the deficit for last month alone was $140.4 billion - and that was 20 percent lower than a year earlier. The red ink for all of the past fiscal year was $1.29 trillion, second highest on record, and this year is headed for the third straight total above $1 trillion.

Current deficits require the government to borrow 37 cents out of every dollar it spends.

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