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Meanwhile, down in DC, Simpson and Bowles Work To Wreck Social Security

It’s probably going to get lost in today’s news, now breaking out of Boston, but…

SocialSecurityposter1Down in DC today, Erskine Bowles and Alan K. Simpson are scheduled to announce yet another of their “debt reduction” plans. Yes, it includes chained-CPI; yes, it includes cuts to Medicare. What is doesn’t include is much in the way of new revenues. Here’s how the Washington Post describes today’s plan:

“seeks far less in new taxes than the original, and it seeks far more in savings from federal health programs for the elderly.”

Yeah, this public policy debate is going in the wrong direction.

Here’s a better suggestion: Let’s return to the good ol’ days when investment income was taxed at the same rate as wage income.

Why does US tax policy give preferential tax treatment to dividends, just because investors don’t have to get their hands dirty in order to receive the income? America is supposed to be the land of Horatio Alger (“pull yourself up by your bootstraps, work hard, and you’ll get ahead”). If our tax code is going to have different standards for earned versus unearned income, shouldn’t the “hard work” type of income be the one we prefer?

Instead, ever since the Bush tax cuts, dividends have been taxed at a much lower rate. And that economic distortion has led to all sorts of bad outcomes. (Read “What Mitt Romney Taught Us about America’s Economy” here.)

According to Congress’ Joint Committee on Taxation, this backwards tax preference will cost $616 billion in revenue over the next five years. (It’s one of the largest “tax expenditures” in the tax code.)

So, let’s call that $1.2 trillion over the next decade… and we’re well on our way toward debt reduction – without any cuts to Social Security or Medicare. Toss in another $516 billion worth of estate taxes (I’m doubling the five-year cost of that tax preference, as calculated by the Joint Committee). Maybe throw in $315 billion from ending the special tax treatment for life insurance annuities. And we’re well over $2 trillion in deficit reduction—all without a single cut to a single government program.

Now let’s apply a little “dynamic scoring”. (Haven’t heard of it? It what the GOP used, back in 2001, to argue that the country could afford the Bush tax cuts. Just assume that the tax code changes will improve the economy, and that will generate even more tax revenues.) Ok, you’re right… “dynamic scoring” didn’t work so well with the Bush tax cuts. But remember the Clinton tax hikes? Remember how the economy improved and the budget went from deficit to surplus?

Add in a little “dynamic scoring” (of the tax-HIKE variety) and… Presto Change-o! Suddenly, we’re doing a whole lot better than Simpson-Bowles.

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Also in the message mix, today: a great, big “oops!” for the two Harvard economists whose research has bolstered the GOP’s austerity agenda. Turns out they made a mistake in their spreadsheet analysis. Yes, this is the very same analysis that Paul Ryan used, during last year’s presidential campaign, to argue that our slow economy was caused by national debt. [Hello? Most of us out here in the real world think the economy’s hurting because so many people are out of work.] Yes, these are the same two economists who testified before the Simpson-Bowles Commission.

Here’s the kicker: their mistake was discovered by researchers at the University of Massachusetts Amherst. Yes, public-funded higher education still works!

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Watching the news this morning, we’re seeing incredible acts of dedication and bravery. Special thanks to everyone whose jobs take them into danger, all those who protect the rest of us. Thoughts and prayers are with the family of the MIT Police officer who was killed; with the MBTA officer who was injured; and with everyone else whose lives have been forever altered by the events of the past few days.

Writing this from the security of my own home, I salute you all.

Congress Gets Ready To Throw The Federal Workforce Under The Bus!

As the lame duck session is about to begin Federal workers in every department are concerned.  Concerned is to nice a word, they are scared sh*tless! Why because they only conversation that is happening right now in Washington DC is about how they have to cut the Federal Budget.

Many of the GOP are pushing a plan created by Senator Alan Simpson and Former White House Chief of Staff Esrkine Bowles.  The Simpson-Bowles plan would save the government money.  However it is not enough to balance the budget or not stop our mounting debt.   The Simpson-Bowles was not adopted or sent to the US House for a vote do to the fact that the ‘fiscal commission’ could not agree on it.

The Bowles-Simpson commission needed 14 of the 18 votes. It failed on an 11-7 vote, with four Democrats and three Republicans, including (Paul) Ryan, voting no.

While Simpson-Bowles also has drastic reforms to other programs like Social Security healthcare I want to focus on the Federal workers.  Here are a few highlights of the Simpson-Bowles plan as written by Kellie Lunney at GovExec.com

Extended pay freeze: The panel recommended a three-year civilian pay freeze across government. The commission estimated the freeze would save $20.4 billion in 2015. The plan also freezes lawmakers’ pay. Obama and lawmakers extended the current two-year pay freeze at least until the end of March, when the continuing resolution expires. Obama wants to give feds a 0.5 percent pay bump when Congress passes a budget next year. But that assumes that one, Congress will pass a budget and two, lawmakers won’t vote to extend the current federal pay freeze.

Smaller government workforce: The Simpson-Bowles report recommends shrinking the government rolls by 10 percent by hiring two new workers for every three employees who leave service. The commission claims such a reduction would save $13.2 billion in 2015.

Increase employees’ health care contributions: The panel suggested adopting a voucher plan and slowing the growth of federal contributions to the Federal Employee Health Benefits Program.

Review military and civilian pension systems: Simpson-Bowles recommended creating a task force to look at changing the pension system for feds and eligible retired service members. One possibility the commission suggests is increasing the amount feds contribute to their pensions. It’s worth noting that Obama and several lawmakers also support making feds pay more for their defined retirement benefit.

So to recap, they have created a plan that starts by cutting workers pay. Mind you these are the same workers who have not seen a pay raise in over three years already.

They want to increase their workload by reducing the number of people to do the job.  So the lines at your local Social Security office are not going to be getting shorter any time soon.  Make employees pay more for health insurance.

They are planning on using the same failed logic and create a voucher program for the Federal Employees Health Plan. This is similar to the plans they are suggesting for Medicare and Social Security that sound great but fail the reality check.

Lastly they are going to stick it to our bravest men and women.  The same men and women who fought to preserve our way of life and the Government that is now trying to hose them.  Changing the retirement system right before or just after someone retires is absolutely wrong.

Congress is once again looking to take from the workers to pay for their mistakes.  They need to stop using the Federal workers as their own personal piggy banks and start working together to find real solutions, not temporary bandaids that hurt workers.  Real solutions start with changes on every level. Increasing revenue, making discrete and calculated cuts not broad base hack jobs, and working together to make these decisions.

People always say we should run the government more like business, well Enron was once a successful business once too.

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