Like it or Not, Change is Coming! Cuts to Your Entitlements & Higher Taxes Likely - Due to U.S. Debt

This week, Erskine Bowles (former President Clinton Chief of Staff) and Alan Simpson (former Republican senator from Wyoming), co-chairmen of the Bipartisan Commission on Fiscal Responsibility and Reform, warned that the U.S. has to make some major adjustments to its spending and deficit in order to avoid complete collapse (Click here for details). 

The duo appointed by President Obama said that Obama made it clear that next year he will propose real reductions in the costs of entitlements. The 18-member deficit commission (headed by Bowles and Simpson) is working hard to come up with recommendations for those reductions by early December.
David Gergen, CNN Senior Political Analyst, gave a detailed breakdown for where the cuts will likely be.
Prepare yourself; this is going to be difficult to swallow:

CUTS TO ENTITLEMENTS

Social Security, Medicare and Medicaid are already strangling the nation. As the bulk of the Baby Boomers file into these programs and as people continue to live longer, the U.S. is going to die trying to pay out benefits to people who live longer than once expected. Gergen warns that the U.S. will likely follow the European Union’s recommended retirement age of 70, as well as “an increase in Social Security taxes for the affluent and a modest reduction in benefits.” As for Medicare, Tea Partiers can rejoice because Gergen also predicts that ObamaCare will likely need to be reopened and repackaged to bring costs down (Now if only the last Republican President acted like a Republican and didn’t add that Medicare drug entitlement too).

REDUCE GOVERNMENT SPENDING

Since 9/11 and George W. Bush, government spending has been out of control. With 9/11, the costs of two wars, two recessions, hurricanes and the like, the government has spent billions more than it has brought in. Spending has to be curtailed. Both Bowles and Simpson promise to protect the poor, education, infrastructure and the all important national security. That being said, Gergen points to two areas where cuts will be most likely – military spending and tax breaks for the middle class. “Millions of us benefit today from a home mortgage deduction, a deduction for employers who pay part of our health insurance, deductions for charitable contributions and the like,” writes Gergen. “These are officially called "tax expenditures" and together they are huge -- their total cost to the government, say commission leaders, about equals all tax revenues.”

RAISING TAXES

Since George Bush, Senior, failed on his promise of “No New Taxes” and lost his reelection, no Republican dares be on the side of raising taxes (lest they be damned by the Tea Party). Most have even signed a “No Tax Pledge.” Truthfully, in order to sustain our country and reduce our debt to China and course correct our deficit, we may have no alternative. One thing most Republicans need to remember is even the “Godfather of the GOP,” Ronald Reagan raised taxes (7 times).

All three of these propositions are complicated and likely will ignite a firestorm in Washington. Gergen points out that the one thing the commission has going for it is that  “Bowles, while Clinton’s chief of staff, negotiated with Republicans in charge on Capitol Hill to reach the first balanced budget in decades. That budget called for spending and revenues to both stand at roughly 21 percent of GDP.”

Gergen suggests “To make the commission's recommendation palatable to all sides, Bowles, Simpson and some of their allies are thinking that a balanced budget might once again be pegged at that 21 percent mark, which would be down from roughly 25.4 percent on the spending side and up from 19.4 percent on the tax side. They would also seek a legislative cap, so that neither taxes nor spending could exceed that level of GDP unless a supermajority in Congress voted to break the cap.”

With the commission’s disastrous forecast, that “change” Obama spoke of is more likely then ever. It may not be the change he hoped for or what we want but the future success of the nation is contingent on it. More than any other time since World War II, this upcoming election will decide the fate of nation. Now is the time for all of us to educate ourselves on the candidates and think beyond a single issue when casting a vote. 

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