US national Debt clock:

http://www.usdebtclock.org/


US to take drastic measures to cut its 15 Trillion Dollar Deficit:

http://www.cbc.ca/world/story/2010/11/11/us-obama-debt-austerity.html


U.S. deficit plan pitches drastic cuts
Last Updated: Thursday, November 11, 2010 | 4:24 PM ET

A commission set up by U.S. President Barack Obama is proposing an austerity plan that would cut back social security and Medicare benefits, modify personal and corporate tax rates and drastically reduce mortgage-interest tax deductibility.

U.S. President Barack Obama speaks with former Republican Senate Whip Alan Simpson, right, and Erskine Bowles outside the White House. (Yuri Gripas/Reuters)
The fiscal responsibility commission's co-chairs, Democrat Erskine Bowles and Republican Alan Simpson, outlined a sampling of the proposal on Thursday.

It includes drastic austerity measures that combined would cut the deficit by $3.8 trillion US. The full details will be revealed later this month but a draft version is available here.

"We have harpooned every whale in the ocean and some of the minnows," Simpson said, adding that the plan is merely a starting point for negotiations.

Bowles, the former chief of staff to U.S. President Bill Clinton, acknowledged the plan would be unpopular, and joked that the pair may have to enter the witness protection program.

The commission, which is examining how the world's largest economy can get its debt under control, recommends reducing congressional and White House budgets by 15 per cent, freezing federal salaries and cutting the federal workforce by 10 per cent.

A $1.4-trillion reduction in discretionary spending would be split equally between defence and domestic programs. Mandatory spending in those programs, which includes social security, Medicare and Medicaid, would be reduced by $733 billion US over time.

The panel recommends reducing benefits for wealthier recipients and raising the age of eligibility for full benefits.

Another aspect of the proposed plan calls for setting income-tax rates at three levels: eight per cent, 14 per cent and 23 per cent. The current system has six tax levels ranging from 10 per cent to 35 per cent. The corporate income-tax rate would be cut from 35 to 26 per cent.

The proposal also calls for the end of public funding for NPR and PBS, a raise in fees at national parks, and the start of admission prices at the Smithsonian Institution in Washington, D.C.

The plan would reduce the federal deficit from $1.3 trillion this year to roughly $400 billion by 2015 before taking aim at the country's almost $14-trillion national debt.

It would reduce the federal deficit to 2.2 per cent of GDP by 2015 and cut debt to 60 per cent of GDP by 2024, the two men said. The U.S. government is projected to run $8 trillion in deficits over the next decade.

"Is America ready for an adult conversation on the deficit?" Jim Cooper, a Democratic congressman from Tennessee, told Bloomberg. "It’s 'put up or shut up' time."

"It puts out there how big and real the problems are," Oklahoma Republican Senator Tom Coburn said.

'It's "put up or shut up" time.'
—Congressman Jim CooperSpeaking to reporters in Seoul, South Korea, where he is attending the G20 summit, Obama urged lawmakers to consider the proposals.

"Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts," Obama said. "If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they’re going to need to be armed with the information about the kinds of choices that are going to be involved."

But a few high-profile voices from both sides of the political aisle moved quickly to oppose the proposal.

Democratic House Speaker Nancy Pelosi called the targeting of social security and Medicare "simply unacceptable," and Republican Representative Jeb Hensarling of Texas expressed opposition to any proposal that would raise taxes.

"Mathematically it apparently works," said Stan Collender, managing director of Qorvis Communications in Washington. "[But] politically, it is going to have a lot of trouble getting support from more than just the two co-chairs."

"Of all the times to do it, now is not the time," Mortgage Bankers Association CEO John Courson told Bloomberg.

"[The plan] just told working Americans to 'drop dead,'" AFL-CIO president Richard Trumka said. "The very people who want to slash social security and Medicare spent this week clamouring for more unpaid Bush tax cuts for millionaires."

From a Canadian perspective, the move to strike the mortgage-interest tax deduction is noteworthy, as it has been blamed for playing a role in Americans' obsession with real estate and subsequent price bubble. In Canada, mortgage interest is not tax deductible.

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