By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, Nov. 17 – Two budget gurus, former White House Budget Director Alice Rivlin and former GOP Senator Pete Domenici, unveiled a comprehensive budget plan Wednesday to cap federal spending, drastically overhaul the federal tax code, and create a 6.5% national sales tax. Rivlin, who presided over generating a budget surplus under President Clinton, called the plan both progressive and pro-growth. Domenici, a long-time Senate Budget Committee Chairman, said the proposal is the long overdue remedy for the “silent killer” of escalating federal debt.

Rivlin and Domenici, joined by 17 public and private sector leaders brought together by the Bipartisan Policy Center, issued the consensus bipartisan report which Domenici said shows that bipartisan agreement on a workable plan is possible. He said the next step is for Congress and President Obama to show the courage and leadership needed to implement the plan.

To inject immediate stimulus to the still struggling U.S. economy, the plan would deliver an estimated $650 billion boost by suspending Social Security payroll taxes for employers and employees for 2011. The plan forecasts that this one-year “payroll tax holiday” would create as many as seven million new jobs.

 
Unveiling the Bipartisan Policy Center's debt reduction report, L to R, former Oklahoma Gov. Frank Keating,
former Sen. Pete Domenici, former White House Budget Director Alice Rivlin. Photo: Agri-Pulse

Among its other proposals, following that initial $650 billion economic stimulus, the “Restoring America's Future” plan promises to:

“The two of us share strong beliefs that America must learn to live within its means, that the current budget path endangers the future of our country, and that bipartisan action is urgently needed,” Domenici and Rivlin wrote in “An Open Letter to the American People” that accompanies the plan. “We believe that [the plan] provides a comprehensive, viable path to restore our economy and build a stronger America for future generations and for those around the world who look to the United States for leadership and hope.”

One key set of changes would dramatically simplify the tax system, establishing individual tax rates of 15 and 27 percent (from the current high of 35), cutting the corporate tax rate to 27 percent (from the current 35), ending most deductions and credits while simplifying the rest. The report forecasts that with these changes, nearly 90 million households would no longer have to file tax returns.

The report acknowledges that freezing domestic discretionary spending for four years, freezing defense discretionary spending for five, and cutting mandatory programs will be tough due to factors such as population growth, rising healthcare costs for an aging population and for military veterans, neglected infrastructure needs, and inflation. But it considers cutting spending essential.

As part of the overall spending cuts, the report calls for $30 billion in farm program cuts for the 2012 to 2020 period. To see how these cuts are allocated, to large commercial farms, to federal crop insurance, and to USDA's conservation programs, go to: www.agri-pulse.com/Rivlin_Domenici_plan_cuts_USDA_spending_20101117H.asp

To read the Bipartisan Policy Center's full 138-page “Restoring America's Future” report, an executive summary or other materials, go to: www.bipartisanpolicy.org/projects/debt-initiative/about

For details on last week's Bowles-Simpson plan to cut farm program spending by $3 billion per year, go to: www.agri-pulse.com/Bowles_Simpson_Deficit_Reduction_Draft_20101110H.asp

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