The National Commission on Fiscal Responsibility and Reform today released its final report, modestly entitled "The Moment of Truth", with recommendations for shaving $4 trillion off the federal deficit through 2020.
The finished report is largely similar to the draft released by the Commission's co-chairmen last month (a draft, incidentally, greeted with either howls of dismay or brooding silence from some Democratic congressional leaders); it proposes significant budget-wide spending cuts, a broadening of the tax base combined with lower marginal rates and a trimming of tax expenditures, and tweaks to protect Medicare and Social Security.
Overall, the final report proposes about $24 billion more in deficit reduction through 2020 than the November draft. Interestingly, it also shifts about $200 billion of the estimated savings from mandatory spending, including entitlements, to discretionary spending. This means deeper discretionary cuts every year than initially planned, and potentially a gentler approach to reforming Medicare and Social Security. For instance, though the draft openly called for "paying doctors and other health providers less" to create savings in Medicare, the final report recommends a pay freeze in 2013, a one percent cut in 2014, and the creation of "an improved physician payment formula" to determine rates in the longer term.
The tax reform section may assuage the fears of liberal bloggers shocked by the draft's suggestion that income tax rates on the highest earners could fall as low as 23 percent. "The Moment of Truth" recommends three brackets of 12, 22 and 28 percent to replace the current six bracket system and keeps popular progressive tax expenditures like the EITC, maintains a slimmed-down health insurance benefit exemption and transforms the mortgage interest and charitable giving deductions into 12% credits.