Over at Heartland’s FIRE Policy News, Eli Lehrer has gone through some of the recommendations from the deficit panel. If you haven’t been following this piece of the news cycle, it’s a great roundup of some of the good, and not so good, suggestions. Some highlights:
Five Good Ideas:
1. Using a More Accurate Calculation of the CPI: Nearly all economists who have looked at it seriously agree that the current calculation of the consumer price index tends to overstate inflation. This tends to increase social security spending and, since tax brackets are indexed for inflation, reduce revenue.
2. Containing Overall Healthcare Spending: The commission recommends containing overall health care spending to inflation plus 1 percent. This may well mean that out of pocket health care costs will rise for many people but, of course, it’s ridiculous that rich seniors get subsidies. (That some of the methodologies recommend doing this seems very problematic to me.)
And some lowlights:
1. Instituting Net Tax Increases: In all likelihood, some types of taxes—gas and payroll taxes—are going to have to go up to avoid a total train wreck. At least until there’s a very strong recovery (and maybe not even then) raising income taxes isn’t a good idea. Although it cuts rates, the proposed plan will increase the actual tax bills for many Americans. Bad idea.
Read more about the deficit panel here.