President Obama set up a commission to look at ways to reduce the size of the national debt, and the two commission co-chairs released ideas for accomplishing this goal. N.C. State University extension economist Mike Walden reviews the highlights.
“This is not a plan to get rid of the national debt, but it is a plan to try to reduce the relative size — the percent that the national debt takes of GDP (gross domestic product) — and their plan would do that. In fact, it would cut that ratio in half within 30 years.
“It is a very ambitious plan. It really is very comprehensive. For example, it looks at our income tax system. It wants to reduce the number of deductions but also to lower tax rates in the income tax system. It recommends some widespread cutbacks in expected increases in federal spending — for example, in Social Security, to do this it would gradually increase the retirement age first to 68 by mid-century then to 69 by the end of the century. It would also get some savings in Social Security by changing the way in which initial Social Security payments are calculated, resulting in somewhat lower initial payments. It would also make Social Security somewhat more progressive.
“But the commission’s co-chairs really go beyond Social Security. They look at, for example, changing spending in Medicare and defense spending.
“So (it’s) a very comprehensive, very ambitious, very controversial plan, I think, designed to at least get the debate started in earnest about how do we get the relative size of the national debt down.”