The Gang Of Six

I was pleased with the Coburn proposal I mentioned here a few days ago. Alas, Coburn has succumbed to the dark side and rejoined the gang of six, which sounds like a title to a bad Kung Fu movie, and their proposal is absolutely terrible. Rather than spend the time to write it up, I thought I would share a very good critique of the plan. 

Here is a summery of Keith Hennessey's critique of the plan:

1. It provides no discretionary spending totals.

2. It cuts defense spending while hiding the ball on nondefense spending.

3. The promised deficit reduction is both overstated and less than is needed.

4. It is a huge net tax increase.

5. It’s a far worse trade than Bowles-Simpson.

6. It trades a permanent tax increase for only a temporary respite on spending.

7. It’s an unfair deal on CPI.

8. It precludes structural reforms to Medicare and Medicaid.

9. It does almost nothing to slow health spending growth, and even the $115 B of additional health savings are bracketed.

10. It leaves the core trillion dollar ObamaCare health entitlement in place..

11. It makes it harder to do Social Security reform, drops the specific Social Security reforms of Bowles-Simpson and increases Social Security spending.

12. It sets the wrong bar for Social Security reform and tilts reform toward tax increases.

13. It locks in the net tax increase, then hopes to deliver on the stated tax reform policies.

14. It undoes most of the benefits of last December’s tax policy battle.

15. It sets up a tradeoff between marginal income rate cuts and capital tax rates.

16. The rate cuts are over promised because the Gang overestimated the revenue that would be raised from reducing tax expenditures.

17. The plan proposes a deficit trigger mechanism that might include automatic tax increases.

Hennessey is quite detailed and is a good read for those interested in the budget crisis. Click here to read.