Next Thursday night Forest Williams and Bryan Kennedy will be picking at the Backyard Boogie on Chat Holly Road. I want to warn all the pretty girls to take a step back. Suzanna James Lucas will make her Walton County debut. Ole Miss, home of pretty coeds, has already accepted our adorable grandbaby.
Occasionally you see a baby so ugly they’re cute, and that sums up the much-ballyhooed Simpson-Bowles proposal.
Until Paul Ryan’s acceptance speech, most Americans couldn’t tell Simpson-Bowles from salad bowls so here’s the CliffsNotes version. Simpson-Bowles proposed radically altering the U.S. Tax Code and, when combined with broad spending cuts, it would lead to a sustainable budget deficit. In a way, Simpson-Bowles, like previously mentioned ugly baby, was a little cute.
Simpson-Bowles found itself waylaid on the way to Congress. The Simpson-Bowles super-committee consisted of six Republicans, six Democrats and six policy wonks of various political persuasions.
Rules required a 14-vote super-majority before Congress would vote up or down with no amendments. Legend has it politics makes strange bedfellows, seven voted nay on passage, two liberal Democrats, one moderate, one union boss and three conservative Republicans. Paul Ryan voted against Simpson-Bowles then later criticized President Obama for Simpson-Bowles not passing. George Orwell, you nailed that one.
It wasn’t like Simpson-Bowles showed up like Moses with some inviolate rules — instead they proposed three different variants. Simpson-Bowles offered to eliminate tax expenditures except for the child credit and the earned income tax credit, eliminate the alternative minimum tax and the phase-outs of itemized deductions and personal exemptions, and replace the current six-bracket individual tax rate schedule with a three bracket schedule with rates of 9 percent, 15 percent, and 24 percent.
On the chopping block, in various forms, were home-mortgage interest deductions, employer sponsored health insurance and retirement savings preferences. Gasoline taxes would increase by 15 cents. Preferential treatment for dividends and capital gains would also end.
After it’s all said and done, taxes would increase along with much higher spending cuts, roughly two to one spending cuts versus tax increases. Medicare enrollees would face higher premiums/co-pays if the system had cost overruns. Simpson-Bowles also automatically triggers an increased Medicare eligibility age if costs continue to outstrip inflation.
Along with sharp domestic spending reductions like the obligatory dumping of Big Bird, Simpson-Bowles also included military spending cuts of particular interest to Northwest Florida. It eliminated the Osprey completely while the F-35 program was sliced by 50 percent. Importantly, it doubles the number of defense contractor positions eliminated.
I’m glad Simpson-Bowles got shot down. The spending cuts and tax increases would trigger a recession. Akin to the ugly baby, it encapsulates the problem facing America. We face painful, ugly but essential choices. Blaming politicians is simple, neat and wrong.
We want it all, we want it now and we want someone else to pay for it. Perhaps the magic fairy will wave her job-creator wand and, voila, our problems will vanish. Either we fix things or the bond market does it for us.
Buz Livingston, CFP offers hourly financial planning and fee-only investment management to clients along Florida’s Emerald Coast. He can be reached at 267-1068, Buz@LivingstonFinancial.netor www.LivingstonFinancial.net.