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Wonkbook: The debt commission reports!

By Dylan Matthews
debt commission chairmen
Former Clinton White House chief of staff Erskine Bowles, left, and former senator Alan K. Simpson (R-Wyo.), chairmen of President Obama's debt commission. (Alex Brandon/AP)

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The co-chairmen of the president's National Commission on Fiscal Responsibility and Reform released their policy recommendations yesterday.

A breakdown of the plan's proposed spending changes.

The plan attacks many popular benefits and is finding a lukewarm reception in Congress, reports Lori Montgomery: "The blueprint drafted by former Clinton White House chief of staff Erskine Bowles and former senator Alan K. Simpson (R-Wyo.) would slice more than $3.8 trillion from deficits over the next decade, reversing a rapid run-up in the national debt that many fear has the country headed for crisis. Bowles and Simpson are proposing to slay a herd of sacred cows, including the tax deduction for mortgage interest claimed by many homeowners, the tax-free treatment of employer-provided health insurance and the practice of letting retirees claim Social Security benefits starting at age 62. The blueprint would raise the early retirement age to 64 and the standard retirement age to 69 for today's toddlers. ...

"The reaction was harsh in some quarters, particularly among liberals who have vowed to protect retirees from any reduction in benefits. House Speaker Nancy Pelosi (D-Calif.) called the plan 'simply unacceptable.' Speaker-in-waiting John A. Boehner (R-Ohio) declined to comment, saying he would discuss the plan with his three representatives on the panel. But Republican anti-tax activist Grover Norquist was not happy and warned that Republicans who support the proposal would be breaking their pledge not to raise taxes. The White House, meanwhile, was noncommital, calling the plan 'only a step in the process toward coming up with a set of recommendations.'"

The commission also backs a public option for health insurance.

The recommendations have no legal force, explains Annie Lowrey.

The plan is bold and credible, writes Howard Gleckman: "My favorite idea is zero-based tax reform. Start by eliminating all tax expenditures and sharply lowering rates to 8, 14, and 23 percent. Then, force Congress to raise rates should it choose to restore specific targeted tax subsidies. This strategy, in some respects, echoes the experience of the 1986 tax reform. To be candid, this proposal is so provocative it almost seems as if Bowles and Simpson realize they have no chance of building consensus on their own commission. As a result, they may have decided to take their best shot now rather than watch their plan get nibbled to death. If so, it may not have been a bad idea. The fiscal panel may fade away in shame, but I have a feeling this plan may live on."

But it doesn't break the political deadlock the commission was created to solve, writes Ezra Klein.

Busking interlude: Tapes 'n Tapes play "Insistor" in the streets of Paris.

Still to come: The White House will back an extension of all Bush tax cuts; the EPA has issues its first guidelines on reducing greenhouse gas emissions; the National Labor Relations Board has started tilting toward unions; and a 3-year-old conducts Beethoven.


David Axelrod says the White House will support a full Bush tax cut extension, report Howard Fineman and Sam Stein: "'We have to deal with the world as we find it,' Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. 'The world of what it takes to get this done.' 'There are concerns,' he added, that Congress will continue to kick the can down the road in the future by passing temporary extensions for the wealthy time and time again. 'But I don't want to trade away security for the middle class in order to make that point.'"

Congressional Republicans are targeting the Volcker rule.

The G-20 has reached a tentative agreement, report Howard Schneider and Scott Wilson: "The accord is not expected to go as far as U.S. officials had hoped in defining the specific commitments countries will make to keep their surpluses or deficits with the rest of the world from getting out of line. That technical work will be deferred -- a make-or-break discussion that will determine how meaningful the broader agreement becomes in practice. But U.S. officials say they will regard it as a success if they leave the Group of 20 summit with an endorsement of the principles and will consider it a victory if China signs on."

The Senate GOP caucus is evenly split on an earmark ban.

U.S.-South Korea trade negotiations have hit a snag, report Howard Schneider and Scott Wilson: "South Korean President Lee Myung-bak and President Obama began their scheduled meeting around noon Thursday in Seoul without a deal in hand. A White House official familiar with the talks said the discussions foundered over long-standing disagreements over U.S. access to the Korean auto and beef markets. The meeting between the two heads of state ended without an accord. ... The failure to produce a signed agreement at the summit is significant. Obama had set a personal goal of completing the Korea deal during the meeting of the Group of 20 world leaders, and Lee had cast the agreement as way to deepen the strategic and political ties between the two nations, as well as the economic ones."

Reps. Barney Frank and Sander Levin are pushing for additional fiscal stimulus:

Treasury Secretary Tim Geithner, Singapore finance minister Tharman Shanmugaratnam and Australian treasurer Wayne Swan outline their G-20 proposal: "Currency issues were once left to the United States, Europe and Japan, but that will no longer work in the new world economy. The currencies of the major advanced economies are roughly in alignment with each other today. However, just as they must continue working together to promote stability among reserve currencies, so too do the emerging economies need to allow their exchange rates to reflect the substantial growth they have achieved in their economies over the last decade and to respond more flexibly to underlying market forces."

Roger Altman and Gene Sperling are the top candidates to replace Larry Summers as National Economic Council head, writes Brad DeLong.

The G-20 should stop currency manipulation to prevent a protectionist backlash, writes Alan Greenspan: "We should not wish to inhibit those market-determined capital flows that reflect the cross-border shifting of resources that enhances global productivity. These flows are the big determinants of desirable realignments of exchange rates over time. But we should discourage reserve accumulation whose sole purpose is to suppress exchange rates for competitive export advantage. ... If the G20 is serious in pledging to sustain open multilateral trade and the international financial system that fosters it, it should be willing to forgo an element of sovereignty to achieve net gains for all."

Adorable animals getting stuck in things interlude: A cat squirms his way into a flower pot.


The EPA has released its first guidelines for reducing greenhouse gas emissions, reports Jason Dearen: "Among the suggestions: replacing dirty fuels used to power oil refineries with cleaner sources and requiring more efficient electricity and energy use with existing power plants to reduce emissions - while not requiring expensive technology upgrades. EPA's new guidance is meant to help states understand how to implement new greenhouse gas reduction requirements while mitigating costs for industry in a bad economy. Most states will use EPA's new guidelines when processing new air pollution permits for power plants, cement factories and other big pollution sources under the federal Clean Air Act. The new rules go into effect Jan. 2."

Rep. Ed Markey, of Waxman-Markey fame, and Raul Grijalva are running for House Natural Resources Committee ranking member.

The EPA guidelines are already generating criticism, reports John Broder: "Senator James Inhofe, Republican of Oklahoma, also blasted the new guidance requiring companies to adopt the 'best available control technology,' or BACT. 'Employers were looking for a clear path forward that would inspire confidence that permits would be granted, and in a timely manner. They won’t find it here,' said Senator Inhofe, the most outspoken climate change skeptic in Congress. ... Senator Jay Rockefeller, Democrat of West Virginia, also criticized the E.P.A. move, saying that it gave companies too little time to comply and too little certainty about how to obtain permits."

Rep. John Shimkus, a candidate for House Energy and Commerce Committee chairman, denies manmade global warming for Biblical reasons:

Campaigning for the House Energy and Commerce Committee chairmanship is already turning negative, report Darren Samuelsohn and Jake Sherman: "Rep. Joe Barton is using campaign-style tactics and opposition research dumps in his long-shot quest for a key House committee perch. The Texas Republican and his staff have been digging into the voting record of Barton’s lead rival, Rep. Fred Upton, to show he's not conservative enough to chair the powerful Energy and Commerce Committee, according to three House GOP aides and one high-ranking conservative Republican who serves on the panel. Barton needs a term-limit waiver to return for another two years atop the committee."

Adorable children leading orchestras interlude: A 3-year-old conducts a recording of the fourth movement of Beethoven's Fifth Symphony.

Domestic Policy

The National Labor Relations Board is tilting more toward unions, report Melanie Trottman and Kris Maher: "The NLRB can't overhaul labor law, but it can make rulings on a case-by-case basis and set broader policies through administrative rules that could give unions more leverage with employers. In one recent decision, the board's three Democrats backed a union practice of holding large stationary banners at a secondary employer's business to protest contractor work being done. The board ruled that because the banners weren't part of a marching picket line, they weren't 'coercive,' and therefore didn't violate labor laws. ... Board member Mark Pearce, a Democrat, said the board was simply carrying out the law, in part by trying to ensure that workers have an 'unencumbered choice' to unionize."

The pharmaceutical lobby spent millions to defend Democrats in the midterms.

The FDA is planning more graphic cigarette warnings, reports Rob Stein: "Armed with new powers approved by Congress last year, the Food and Drug Administration is proposing warnings that include one containing an image of a man smoking through a tracheotomy hole in his throat; another depicting a body with a large scar running down the chest; and another showing a man who appears to be suffering a heart attack. Others have images of a corpse in a coffin and one with a toe tag in a morgue, diseased lungs and mouths and a mother blowing smoke into a baby's face. The new warnings will cover half the front and back of each pack and 20 percent of each large ad."

The FCC is investigating Google Street View for potential privacy violations.

Waivers from health-care reform rules are increasing, reports Reed Abelson: "Last month, federal officials granted dozens of one-year waivers that were aimed at sparing certain employers, including McDonald’s, insurers and unions who offer plans that sharply limit the coverage they provide. These limited-benefit plans, also known as 'minimeds,' fail to comply with new rules phasing out limits on how much policies will provide in medical care each year. Concerned about the potential disruption that would be created by enforcing the new rules, the administration has granted dozens of additional waivers and also made clear that it would modify other rules affecting these policies."

Nancy Pelosi wants a vote on the DREAM Act in the lame duck session.

Passing legislation in the lame duck session is legitimate, writes David Broder: "You could argue that their credentials have been rejected by the voters. But I think it is also proper to think of them as relatively disinterested and informed observers, well equipped to pass judgment on the work of others. A Russ Feingold of Wisconsin, voted out in the massive upheaval that took place in his state, would lean over backward not to be or appear vindictive in his votes in this last session in which he will participate. Similarly, Mike Castle of Delaware was ambushed in the Republican Senate primary and won't be back. But I would certainly trust him to be the same independent, thoughtful legislator he has always been."

Dylan Matthews is a student at Harvard and a researcher at The Washington Post.

By Dylan Matthews  | November 11, 2010; 9:11 AM ET
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All I see are refusals to raise taxes with a bunch of other ideas thrown in for good measure.

And since there are also no serious DOD budget cuts on the table, this means one thing, and one thing only: no matter how objective or centrist this commission portrays itself as, all other programs will eventually be attacked ruthlessly until the GOP gets their way and we become a plutocracy.

Posted by: lauren2010 | November 11, 2010 9:56 AM | Report abuse

The entire debt problem is based on the lie that taxing rich people is bad for the economy. Research shows that most rich people take that extra money and invest it in the Asian markets which are really hot right now but those investments do nothing for our economy. If you brought the rich people tax back up to 70% as it was in the 1960s, you could have a 1% business tax rate (perhaps a negative tax rate for new small business) which would massively stimulate the economy, pay for medicare for everyone (like Australia which cost 1/2 as much and they 6 years longer if you adjust for age), and social security. Everyone would be happy except for a few unAmerican multimillionaires and Michelle Bachmann. Next, pass a law that businesses that contribute literally nothing to America and only represent a "business tax" on everyone else should have a tax rate of 100% (end of Goldman Sachs, hedge funds that base profits on microtrading strategies). Next, have a dying destructive industry tax to stimulate industrial growth and modernization (oil companies, most of the insurance industry which should be replaced by nonprofit insurance pools or yes that terribly ugly word big government). Pass a law that bans any former or current general from having any business relationships with defense contractors. After Hitler overtook the German democracy, what did the Germans do when they got their democracy back? They passed truth in advertising and journalism laws. Now the only thing left to do is pass the Jail for Judges Amendment which would avoid decisions like Citizen's United and give ordinary Americans a way to address judicial and political corruption (no one else is going to do it). The only people that need to live within their means are people making over eight million a year or whose sole job responsibility is to cheat the public. The rest of us need and deserve a break. By the way, all of my radical ideas are based on polls that show over 80% of the American public endorse these ideas. The solutions are simple and popular. The corruption is widespread and convinced they can continue to fool the American public. The only real political sacred cows are taxing millionaires. I hope I can count on your vote Ezra.

Posted by: toddq | November 11, 2010 10:01 AM | Report abuse

lauren and the other liberals that decry this report are now becoming the new party of NO.

1. They have been screaming for years for a public option. this gives it to them.

2.They've been screaming for years that the mortgage deduction favors the "rich" or somewhat rich. This ends that deduction.

3.They've been screaming for years that the tax codes favors the rich who have clever accountants that can find a deduction where the poor can not. This simplifies the tax code which benefits the poor.

4.They've been screaming for years that SS should be means tested for those that don't financially need it. This does that.

5.They've been screaming for years for defense cuts. Its in there at $100B

6.They've been screaming for years that the employer tax exclusion forces employees to stay in jobs they don't want and hurts individual sole proprietors that can't access this. It ends with this proposal and i'd think the exchange would have more participants in it becuase of this.

All this and more and the liberals ganged together to bash the report without honestly seeing much of it and knowing its a first step to fiscal sanity. So the biggest argument was a tick up in the retirement age. Their alternative? Do nothing and come 2037 payments are reduced by force.

Posted by: visionbrkr | November 11, 2010 10:11 AM | Report abuse


you need to re-read my first post.

Despite what they say, this plan does NOT result in a public option. It results in a plutocracy with no entitlement programs at all. All we'll have is a two tiered economy (rich and poor) with a bloated DOD budget and default debt and a leadership selected by transnational corporations and laws selected by their Supreme Court shills. Large corps will all become multinational and won't care about our debt (though they helped create it and benefitted form it).

$100 billion DOD tax cuts accounts for 10 months of the Iraq war, much less a doubling of the DOD budget since 2001.

You don't get it.

The ONLY promise that will be kept in that plan is to eliminate or reduce taxes and to maintain DOD spending. Everything else will fall by the wayside as a result, as the realities of debt math take effect.

Allowing the Bush tax cuts for the wealthy to be extended (creating $700 billion in more debt) as their first initiative proves they are wolves in sheep's clothing and talking with forked tongues.

Posted by: lauren2010 | November 11, 2010 10:24 AM | Report abuse


I read somewhere that this proposal raises $100 Billion in taxes more than is taken in now.

Here are some snippets:

Limit mortgage deduction to exclude 2ndresidences, home equity loans, and mortgages over $500,000-- who do you think this aimed at?

Also the payroll tax is to be increased past its current threshold to reach 90% of wages by 2050 which is a direct shot at high earners.

I also recall an increase to capital gains tax further than what the President wants although i can't find the detail on that now.

Trust me there's a lot that conservatives on here to hate but you don't see them for the most part bashing this. They, like the President said wait for it all to come out and then we'll discuss it. Its (as I said) the new party of NO that has their head in the sand led by Ms. Schakowsky who was all over the news last night bashing it. I rather enjoyed watching a liberal Lawrence O'Donnell all but tell her she's wrong for taking that position.

i'm thinking they all got together and said that we need to stop this no matter what if it mentions any adjustment to Social Security but then come 2037 it'll be reduced for sheer inability to pay.

When and IF the DOD doesn't get cut to what they say then complain. That's like me coming on here and complaining that they won't freeze federal salaries as proposed in this report.

Posted by: visionbrkr | November 11, 2010 10:37 AM | Report abuse

Are 24 hours up yet? What a waste of time.

You don't even have to look at the report. As Ezra pointed out yesterday, you couldn't even get all the commisioners to agree on the report so this thing was scrap before the printer ink was dry. It will warm the hearts of wonks for another week or so, but it is DEAD ON ARRIVAL

Posted by: 54465446 | November 11, 2010 10:44 AM | Report abuse

I'd suggest that before folks get all in a lather about the draft proposal from the debt commission that they actually read the powerpoint proposal ( It takes only about 10 minutes to plow through.

There's a lot of misinformation out there in the press (Remove mortgage deduction! Reduce SS benefits!) with just nuggets of truth in them. The proposal is good, IMO, but tepid in approach (the proposed increase in retirement age to 69 would take many decades, for example). We need to make these hard choices for the sake of our kids and grandkids. I think that the proposal is a good start.

Posted by: Beagle1 | November 11, 2010 10:54 AM | Report abuse

The real LONG TERM answer to the deficit problem is to greatly reduce the size of government and to greatly reduce the tax and bureaucratic burden on everyone. Government is to big and far to intrusive into the private affairs of our lives and business. Our government is dysfunctional at all levels and that is what is holding back economic growth and job creation. It is only with robust growth that we will ever solve the deficit mess and that will only happen with much smaller government, much lower taxes, and much less government intrusion into our affairs. The last election was a start but we must continue to VOTE THEM OUT!!!

Posted by: AngryMobVoter | November 11, 2010 11:02 AM | Report abuse

You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price check If you have health insurance and do not care about cost just be happy about it and trust me you are not going to loose anything!

Posted by: kevinmarlo07 | November 11, 2010 11:45 AM | Report abuse


conservatives aren't bashing this proposal because they know that in the end taxes wont be raised. The ONLY thing that will happen is an end, or serious reduction, of entitlements like SS, medicare, medicaid.

Don't imply (as you do) that somehow conservatives are more apt, because of how their brains are wired, to compromise for the good of the country, whereas liberals, because of the way their brains are wired, aren't capable of compromise and just whine by nature.

Such arguments are naive. In fact, liberals have compromised far more than conservatives, and the reason is--not their brains-but because liberals are a minority in this country. Conservatives enjoy dominance in these issues and therefore dictate what happens.

Again, that's why conservatives don't worry about this plan. They know this plan won't be enacted into law as-is.

This plan is simply a ploy to start making Americans comfortable with the idea that major entitlement changes are coming. Conservatives OTOH will NEVER stop fighting taxes of any kind until they are extinct.

BTW, you earlier claimed that I have long argued that the mortgage deduction favors the rich and that we should eliminate it. Well, you are wrong. Here's proof....

Posted by: lauren2010 | November 11, 2010 12:34 PM | Report abuse


you may have argued that before but another liberal commenter told you that you were wrong and you are. Removing the mortgage interest deduction is extremely progressive as etdean1 said. Listen the rich can't pay off their houses any more than you or I can because their houses cost a lot more than yours or mine does.

So then I guess you'd agree with us conservatives that the HCR bill was not deficit neutral because the government will NEVER let the SGR go through for medicare docs.

I guess you'll be happy when SS is cut come 2037 as per the report because there's no money left to pay it. Did you bother to see or care that the interest on the debt is projected to be in the trillions not long from now. When that's the case you can say goodbye to Medicare, SS, Defense everything. That's why China et al asks to cash their IOU's. Trust me there's many more sacred cows being sacrificed on the conservative side than on the liberal side here.

Posted by: visionbrkr | November 11, 2010 1:18 PM | Report abuse


At least now you are not pretending that I have long fought for elimination of the deduction, as your earlier post claims.

I disagree with you and etdean and anyone else who says that deduction is progressive.

It is a fact that MOST people who pay off their mortgages are wealthier than those who don't.

The vast majority of mortgage holders are middle-class. The vast majority of people who paid it off are upper middle-class or top crust.

Most liberals do not favor eliminating the deduction.

Most Americans don't want it ended.

Most people who want it ended have paid off their mortgage and have higher tax rates.

It is my belief the corporate media AND/OR wealthy people (Republicans and Democrats) are fostering this myth that liberals want it eliminated so as not to require more tax raises on wealthier people later in order to fight the debt.

It is part of the battle to shift taxes from the rich to the middle-class.

So until this talk of extending tax cuts for the wealthy has stopped, don't come around here pretending that simultaneous efforts to raise revenues by other means (e.g. elimination of the deduction) is somehow not related to the need to pay for those tax cuts. It's called CONNECTING THE DOTS.

Posted by: lauren2010 | November 11, 2010 1:35 PM | Report abuse


I know i'm wasting my time but here goes.

When i say:

"Lauren and other liberals" that means that either you OR other liberals may state something. It doesn't mean I said you specifically said it.

so you're going to ignore the facts around you and what etdean1 said in the previous post you linked to for your lunacy talk of "rich people have paid off their mortgage so they want to take the deduction away because it decreases their taxes or keeps the poor, poor or maybe makes them poorer." Do you not realize how silly that sounds? I know you're the king/queen of conspiracy theories but i've gotta say this takes the cake.

Do a lot of poor people have second homes and mortgages over 500k because that's a target of the deficit commission where people can't take deductions on a second home or a mortgage over 500k.

I'd love to see you try to type your way out of this one. I can't wait.

And its not called Connecting the dots, its called someone's off their meds.

Posted by: visionbrkr | November 11, 2010 2:29 PM | Report abuse


etdean has an opinion, that's all.

My opinion differs.

And when you said "Lauren and others..." you said exactly what you said, and in this case you claimed I was fighting for elimination of the deduction, though earlier comments here on this blog make it clear I most certainly did not.

Also, your idiotic rant about "Lauren and others..." is also wrong in the most general sense, in that most liberals are in fact not wanting to end the deduction. NOT TRUE.

And regarding your comments about $500K thresholds, where did you get that figure?

Posted by: Lomillialor | November 11, 2010 2:38 PM | Report abuse

Lomillalor or lauren,

uh i got it from the Chairman's report page 26 Option 2 (Wyden-Gregg Style reform).

It mentions in individual tax reform bullet point 5.

-Limit mortgage deduction to exclude 2nd residences, home equity loans and mortgages over $500k.

did you bother to read any of this at all?

The blueprint that they put forth is a start. Its not a do all end all and there are ways you can make it better or worse depending on whose opinion you have but when you go off half cocked then I guess you're mind is made up. Sounds like you are Nancy Pelosi and Jan Schekowsky in this example and I'm President Obama and most of the Republicans i've heard to date that are intrigued by it and realize we need to talk it out to find something that works for all.

The fact of the matter is that the "rich" would get less of a deduction and pay more in taxes than the poor would because the rich's houses are worth more than the poor (assuming they don't rent). if you don't want to see something that's right in front of your face I guess that's your right but I'm done wasting my time here.

Posted by: visionbrkr | November 11, 2010 3:07 PM | Report abuse


My comments are directed against the wonkbook comments and the specific idea to ELIMINATE the deduction, as opposed to the idea of LIMITING the deduction.

I was aware of ideas of limiting the deduction but didnt know the specific details.

Anyway, getting back to MY original point, as opposed to whatever it is you are trying to drag me into, any debt reduction proposal that CAPS total revenues is a non-starter.

BTW, most rich people have paid off their mortgages, including their second houses. Most people who have mortgages are middle class, even those with second home mortgages.

Eliminating the deduction will not greatly increase taxes of the wealthy, especially when they will be getting more tax cuts in the near future to offset whatever they lose in the later debt reduction efforts.

Posted by: lauren2010 | November 11, 2010 5:15 PM | Report abuse


I'd love to see you quote some actual statistics that shows that the wealthy have paid off their mortgages? Any stats I've seen show that 80% of homeowners still hold mortgages and I'd expect those that dont' are simply older of which some may be wealthy but some may not be and that being in the home for 30 years has allowed them to pay it off, not necessarily wealthy. But when you spout off and don't put any statistics I guess that's what you get.

Eliminating deductions WILL increase taxes paid by the wealthy becuase those who are poorer aren't paying much in taxes anyway.

Excuse me while I continue to beat my head against a brick wall.

Posted by: visionbrkr | November 11, 2010 9:40 PM | Report abuse

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