Dec. 1: Debt Commission member and Senate Budget Committee Chairman Sen. Kent Conrad, D-N.D., center, speaks during a meeting of the commission on Capitol Hill in Washington, D.C. (AP)
Highlights of proposals by leaders of President Barack Obama's bipartisan deficit commission:
DEFICIT REDUCTION
— Cuts $3.9 trillion from deficits estimated at $8.3 trillion over 2012-2020.
— Produces a deficit of $421 billion in 2015 and $279 billion in 2020.
— Stabilize the national debt at 66 percent of the size of the economy, a level economists say is sustainable.
SOCIAL SECURITY
— Increase the Social Security retirement age by one month every two years after it reaches 67 under current law. It would reach 68 around 2050 and 69 around 2075. Raise the early retirement age from 62 to 64 on the same timetable. Workers who perform manual labor would receive a hardship exemption.
— Lower cost-of-living increases.
— Reduce benefits further for higher-income beneficiaries and establish a higher minimum benefit for poorer retirees.
— Gradually raise the threshold on the amount of income subject to the Social Security payroll tax.
— Give retirees the choice of collecting half their benefits early and the other half at a later age.
TAXES
— Overhaul individual income taxes and corporate taxes. For individuals and families, scale back a host of popular tax credits and deductions, including the child tax credit, the mortgage interest deduction and the deduction claimed by employers who provide health insurance. Income tax rates would, in turn, be significantly lowered, with the top rate dropping from 35 percent to 28 percent and the top rate for taxpayers making up to $210,000 dropping from 28 percent to 22 percent.
— Reduce the corporate income tax rate to 28 percent from 35 percent, and stop taxing the overseas profits of U.S.-based multinational corporations.
— Increase the gas tax by 15 cents a gallon to fund transportation programs.
— Devote $80 billion in increased revenues to the deficit in 2015, rising to $180 billion in 2020, capping revenue at 21 percent of gross domestic product.
DOMESTIC SPENDING
— Freeze Defense Department salaries and bonuses for three years, and noncombat military pay at 2011 levels for three years. Double Defense Secretary Robert Gates' proposed cuts in defense contracting. Reduce overseas bases by one-third, cut spending for base support and integrate children in military families into local schools.
— Reduce congressional and White House budgets by 15 percent, freeze federal compensation at non-defense agencies for three years, cut the federal work force by 10 percent, eliminate 250,000 non-defense contractors and end money for commercial space flight.
— Eliminate noncompetitive spending bills known as "earmarks."
— End grants to large and medium-sized hub airports; require airports to fund a larger portion of the cost of aviation security.
— Cut funding for public broadcasting.
HEALTH CARE
— Phase out by 2038 the tax-free status of employer-provided health benefits, providing incentives for people to enroll into cost-conscious insurance plans. The exclusion would be capped for the most generous plans.
— Limit annual cost increases for Medicare and Medicaid, the giant health federal care programs, to no more than 1 percent above the growth rate of the economy. This would be accomplished by rewarding quality instead of sheer volume, demanding rebates from drug companies that want to participate in Medicare and raising cost-sharing for Medicare recipients while limiting their out-of-pocket costs.
— Replace federal employees health insurance benefits with a voucher system in which they would receive slowly-growing subsidies to buy insurance.
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