Washington, D.C. – This morning, President Obama met with congressional leaders in an effort to negotiate a deal that would avoid the fiscal cliff. The Bipartisan Policy Center applauds this step forward and is encouraged by the conciliatory tone of the leaders’ post-meeting comments.
Recognizing the urgency of the moment and the dynamic political situation, Senator Pete Domenici and Dr. Alice Rivlin, co-chairs of the Bipartisan Policy Center’s (BPC) Debt Reduction Task Force, released an updated version of their 2010 plan today. Click here to view the Domenici-Rivlin 2.0 plan.
Speaking at an event hosted by the Peter G. Peterson Foundation this morning, Dr. Rivlin outlined the three key pillars of BPC’s updated plan: enact policies to jump-start the economy; reform entitlements, particularly Medicare, to rein in their rate of growth; and implement pro-growth tax reform that will lower rates, broaden the base, and raise sufficient revenue to help pay down our debt.
At today’s event, Dr. Rivlin also encouraged Congress to take clear action in the lame duck session to avoid the fiscal cliff and establish a framework for achieving comprehensive spending and tax reform in 2013.
BPC’s Framework for a Grand Bargain would require the committees of jurisdiction in the 113th Congress to produce a debt reduction package that would reduce projected federal debt by $4 trillion over a decade. The three-step plan would also entail a “down-payment” up front to demonstrate policymakers’ commitment to dealing with the nation’s debt problem, and a legislative “backstop” to automatically become law if the 113th Congress failed to act. Speaker Boehner alluded to this type of framework in his comments at the White House this morning.
Domenici-Rivlin 2.0 recommends an income tax rebate similar in structure to those implemented in 2001 and 2008, in lieu of a payroll tax holiday. The income tax rebate would put money into consumers’ hands faster and in a more targeted fashion, providing a stronger boost to the economy.
On health care, the plan would further improve the cost effectiveness of traditional Medicare through innovations in reimbursements and other incentives while strengthening competition among comprehensive, integrated health plans.
Domenici-Rivlin 2.0 revamps the Task Force’s original tax reform plan by eliminating the Debt Reduction Sales Tax, increasing the gas tax, and phasing in certain provisions to simplify taxes for businesses and individuals. The updated plan would simplify the tax code by aligning the top individual, capital gains and dividend tax rates with the significantly-reduced corporate tax rate at 28 percent, while eliminating the Alternative Minimum Tax.