The national debt is a major issue. Recently the heads of the U.S. president’s fiscal commission issued a debt reduction plan. And another group has released yet another plan. N.C. State University economist Mike Walden highlights the major recommendations in this other plan.
“This is a report of a bipartisan private debt reduction task force. Like the president’s fiscal commission — or at least the report of the heads of that commission — it would gradually reduce the relative size of the debt but more aggressively than the fiscal commission.
“It would, like the fiscal commission, reduce corporate income-tax rates, individual income-tax rates and reduce tax deductions in order to stimulate economic growth. It would also make major changes to the growth rates in Social Security, Medicare and Medicaid. So all of those elements are common between the two debt reduction groups.
“The biggest difference between the private group and the president’s commission is that the private group would add a new tax. They would add a new federal sales tax with a rate of 6.5 percent. Technically it is called a value-added tax. It would be added at each stage of production. And this is one reason why the private group is able to reduce the relative size of the debt faster than the president’s commission.
“So we have got a lot of recommendations now on the table. The big question is whether any of them will be taken.”