Summary of Gang of Six Deficit Reduction Proposal

Jul 20, 2011

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A BIPARTISAN PLAN TO REDUCE OUR NATION'S DEFICITS

EXECUTIVE SUMMARY

This bipartisan, comprehensive, and balanced plan consistent with the recommendations of the Bowles-Simpson fiscal commission that will:
• Slash our nation's deficits by $3.7 trillion/$3.6 trillion over ten years under CSO's March 2011 baseline, or $4.65 trillion/$4.5 trillion under the original fiscal commission baseline (which used the President's 2011 budget request as the starting point for discretionary spending).
• Stabilize our publicly-held debt by 2014.
• Reduce our publicly-held debt to roughly 70% of our economy by 2021.
• Impose unprecedented budget enforcement.

A COMPREHENSIVE AND BALANCED PROPOSAL
The plan uses a two-step legislative process: (1) an initial bill that makes immediate cuts; and (2) a process for a second bill to enact comprehensive reform and put our nation on a stable fiscal path. The plan would:

Immediately implement aggressive deficit reduction down payment
• Cut deficits by $500 billion.

Dramatically cut discretionary spending
• Cut nonsecurity and security discretionary spending over 10 years.
• Maintain investments that encourage economic growth, strengthen the safety net for those who truly need it, and preserve a strong national defense.

Carefully strengthen the solvency of our most important entitlement programs
• Spend health care dollars more efficiently in order to strengthen Medicare and Medicaid, while maintaining the basic structure of these critical programs.
• Fully pays for SGR (the "doc fix") over 10 years.

Fundamentally reform our tax code
• Reduce marginal income tax rates and abolish the $1.7 trillion Alternative Minimum Tax.
• Encourage greater economic growth.
• Enhance the competitiveness of American businesses and workers against global competition.
• Reform spending through the tax code to eliminate investment distortions and tax gaming.
• Change the debate about taxes in America from rate levels and carve outs to competitiveness, fairness and growth.
• It CSO scored this plan, it would find net tax relief of approximately $1.5 trillion.

Strictly tighten the government's budget processes
• Impose spending caps and security/nonsecurity firewalls.
• Sequester accounts at the end of the year to recoup any excessive spending by Congress.
• Restrict the use of emergency designations that circumvent the spending caps.
• Prevent Congress from exceeding the caps by requiring a stand-alone resolution subject to a 57-vote threshold, in order to isolate that vote to increase the deficit from any other policy items.

Reform Social Security for future generations
• Ensure 75-year solvency of Social Security and provide for a decennial review of the program to ensure ij remains solvent.
• Reform Social Security on a separate track, isolated from deficit reduction - any savings from the program must go towards solvency.