Deficit Panel Targets You
You may have forgotten that there is a federal “fiscal commission” working since against a December 1 deadline to propose a plan for balancing the budget by 2015. The official title is the National Commission on Fiscal Responsibility and Reform. You haven’t heard much about it, have you? That’s because there is an election to take care of first.
Let’s get one thing out of the way first. There will not be a balanced budget by 2015, no matter what plan the fiscal commission suggests. Congress – Republicans and Democrats alike – does not seem capable of doing that. (OK maybe it could happen if the Tea Party takes over the House, Senate and the White House.)
But there will be an attempt to do something – and that brings us to some of the strategies being discussed by the commission which are more about increasing revenue and less about decreasing spending.
Near the top of the list is the mortgage interest deduction, which costs the government a lot of tax dollars and is something unique to our tax system. Eliminating this deduction has been discussed before but quickly and firmly squashed by the real estate and banking lobbies. Thus, if anything comes of this agenda item, it will not be a complete elimination of the deduction. Instead, I predict that the proposal will be to phase the deduction out for the higher income taxpayers.
Social Security and Medicare are being also discussed but there will be no proposals for immediate reform. That’s too complicated and politically risky for this panel.
Keep your eyes and ears alert for the commission report. Your economic future may depend on it.