America's "Number 1 domestic problem," the federal deficit, according to Sen. Judd Gregg, (R- N.H.), took center stage on Wednesday morning as President Obama's bipartisan deficit commission released its findings. Some members of the 18-member bipartisan deficit commission, appearing on CNBC Wednesday, weighed in with their thoughts.
The commission will vote on the proposal Friday, reflecting sharp divisions within the panel.
Plan Would Hurt Seniors: Rep. Schakowsky
Illinois Congresswoman Jan Schakowsky, a Democrat, who opposes the plan and will vote against it, believes that some of the plan's recommendations negatively impact seniors and others who are low-income.
“I feel very strongly that taking it out on the backs of the senior citizens, and Medicare and Social Security is not the way to go,” said Schakowsky.
“Clearly we have to control health care costs, but not for anyone who’s average income is about $18,000 a year.”
Schakowsky said the wealthy have prospered while others have suffered and deficit reduction should not affect anyone with a fixed or low income. She said one way to cut Medicare costs is to negotiate with pharmaceutical companies, like the Veterans Administration does, on drug costs.
'It's Got Warts,' But It's Workable: Sen. Gregg
Gregg, a deficit commission member, a ranking member of the Budget Committee and a lame duck senator, is in favor of the plan. He said the solution lies in bi-partisanship and not in finding a perfect solution now. He added, "I’m not in favor of everything in this package: It’s got warts."
Gregg said the plan does raise taxes, but in a "very ‘Reagan-esque’ way that dramatically cuts rates and creates a tax law that is more oriented to capital formation using money to create money."
He added: "I don’t argue these as tax increases. When you take the rates down, your top rate is 21 percent, your middle rate is 15 percent, your lowest rate is 8 percent. You eliminate the deductions, you’re creating the type of level playing field to invest for the purposes of economic activity.
"And I think you’re going to generate huge economic activity with this and, yes, you’re going to generate massive revenues, it’s going to be that there’s a lot of economic activity."
'Cut Spending': Rep. Ryan
It's what's missing from the deficit commission's plan, not what's in it, said Rep. Paul Ryan, (R-Wisc.), who plans to vote against the plan.
"My biggest concern is what it doesn’t do: If you really want get this debt under control, you have to structurally change our federal health-care programs. This doesn’t do that. Of the $88.6 trillion unfunded liability we have out there, most of that is because of health-care programs, and this [plan] really doesn’t address those issues," said Ryan.
Ryan said the US doesn't have a revenue problem, and Congress doesn't need to raise taxes at all, but to cut them.
"If we make the tax cuts permanent, if we pass the alternative minimum on tax, our revenues still go up to our historic average, according to CBO (Congressional Budget Office)," he said.
Ryan said that, according to the plan, of the $1.1 trillion a year in tax expenditures, $100 billion annually is dedicated to raising taxes.
"I would have applied that toward keeping tax rates on capital lower," he added. "I worry about raising tax rates on capital, because that, too, speaks to our international competitiveness. We should be lowering the after-tax rate of return on money on capital, not raising it. When you look at a baseline comparison, this thing looks like about $2 trillion tax increase over 10 years."
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