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Vol. 74/No. 45      November 29, 2010

White House deficit panel:
Slash programs, tax workers
(front page)
The bipartisan deficit-reduction commission appointed by President Barack Obama has proposed cuts to “outdated programs”—Social Security, Medicare, and Medicaid—along with regressive tax measures that hit working people the hardest, the elimination of government jobs, and a three-year wage freeze on government workers.

Commission chairs Erskine Bowles, a Democrat, and Alan Simpson, a Republican, announced the plan November 10. It will now be discussed by the commission as a whole, which is supposed to present Congress with a final report December 1.

“Americans have always been willing to sacrifice to make our nation stronger,” the draft asserts in its opening patriotic appeal.

The commission proposes indexing the retirement age to life expectancy, projecting a retirement age of 68 by 2050 and 69 by 2075. Anyone retiring earlier would not receive full Social Security benefits.

The cost-of-living allowance (COLA) for Social Security benefits would be reduced by further manipulating the Consumer Price Index (CPI). The draft claims the current CPI “overstates inflation,” because when the price of a product goes up, people can just buy a cheaper substitute.

A major source of Social Security spending cuts projected in the draft is attributed to the ambiguous phrase “progressive changes to benefit formula.”

The draft proposes accelerating cuts that were approved in Obama’s health “reform” law. This includes money for Medicare Advantage; home health care; and for hospitals that treat low-income patients, which are already scheduled to lose 25 percent of their federal funds by 2015. Medicaid funds spent on long-term nursing-home care would be capped.

For the first time, veterans without service-related disabilities and those with low incomes would have to make a copayment for medical treatment. Insurance premium payments by retired government employees would increase.

Payments to doctors treating people on Medicare and Medicaid would be reduced, meaning more physicians would turn away these patients. There would be a cap on the amount of employer-provided health care that is tax deductible, leading many bosses to reduce their workers’ coverage.

The plan calls for reducing the number of federal employees by 10 percent through attrition, amounting to 200,000 people. The amount government employees still working would pay toward their pensions would go up.

The proposal also lists cuts to military spending, many of which have already been adopted, like replacing military personnel engaged in commercial activities with civilians and reducing the number of U.S. troops in Europe and Asia. The draft also proposes the same three-year freeze on the pay of all civilian employees of the Defense Department as is being imposed on other government workers.

The plan nearly doubles the federal tax on gasoline to 34 cents per gallon by 2013. It reduces the corporate tax rate from 35 percent to 26 percent, and the highest income tax rate from 35 percent to 23 percent. It eliminates tax deductibles like earned income tax credit and child-care credits and increases charges at federal parks and the Smithsonian museums.
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Solution: Working-class solidarity  
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