President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform fell short of the 14 votes necessary today to send its deficit reduction plan to Congress for immediate action.
But the plan did receive majority approval with 11 out of 18 members supporting the final recommendations. Following the vote, President Obama and congressional leaders will decide the next steps for the plan.
The recommendations included a range of proposals from reducing tax breaks for individuals and corporations to raising the retirement age for Social Security benefits and curbing government spending.
Among the proposals, which are projected to shave nearly $4 trillion from the deficit through 2020, are reforms to the tax code.
The report calls for the reduction of several tax credits and deductions for individuals such as the mortgage interest and charitable giving deductions. Itemized deductions would be eliminated, and all taxpayers would take standard deductions.
The commission also proposes that interest for newly issued state and municipal bonds would be taxable.
At the same time, income tax rates would be lowered and the alternative minimum tax would be repealed. The commission recommends reducing the top tax rate for individuals from 35% to 28%. The corporate tax rate would also be reduced from 35% to 28%. And multinational companies would no longer be taxed on overseas profits.
Social Security reform proposals include gradually increasing the early and full retirement age for benefits. The retirement age would rise to 68 in 2050 and to 69 in 2075. The commission also recommends raising the early retirement age to 64 from 62.
The commission proposes lowering the cost-of-living increases (COLA), reducing benefits for high income beneficiaries while setting a higher minimum benefit for low-income retirees, and raising the amount of income subject to the Social Security payroll tax.
Additional recommendations include a 15% cut to congressional and White House budgets, pay freezes for Congress and other federal workers, and reforms to Medicare reimbursement in the areas of physician payments, drug costs, and education.
The goal of the recommendations is to reduce the nation’s ballooning debt. The federal debt has grown to 62% of GDP in 2010, from 33% of GDP in 2001, when the budget was last balanced, the commission found.