Summary of the "Gang of Six Plan"
July 20, 2011
Provides major tax cuts to the wealthy and large corporations.
- The Gang of Six plan reduces the top marginal income tax rate for the wealthiest Americans and most profitable corporations from 35% to as low as 23% (about 34% lower than the top tax rates under Bush).
- Instead of reforming the Alternative Minimum Tax, it abolishes it altogether providing a major tax cut for the wealthiest Americans.
- It reduces the deficit by about $3.7 trillion over 10 years, while providing a net tax cut of $1.5 trillion that will mainly go to the wealthiest Americans and most profitable corporations.
- In other words, 100% of the deficit reduction achieved by the Gang of Six plan is through spending cuts to programs like Medicare, Medicaid, education, child care, Head Start, LIHEAP, environmental protection, and other programs that the sick, the elderly, the children, and working families need.
- Any tax revenue that is raised by closing tax loopholes for large corporations must be used to lower tax rates.
- Revenue raisers can not be used to increase spending at all. Revenue raisers can only be used to lower tax rates or reduce the deficit.
- By moving to a territorial tax system, the Gang of Six plan will allow large corporations to avoid paying federal income taxes by outsourcing jobs overseas.
Reduces the deficit on the backs of the elderly, the children, the sick, and working families.
- It imposes undefined spending caps to be in effect until at least 2015 that could only be raised by 67 votes in the Senate.
Immediately reduces Cost of Living Adjustments for Social Security benefits.
- Even though Social Security recipients haven't gotten a COLA for 2 straight years, the Gang of Six believes that the formula for calculating COLAs is too generous.
- Under their plan, they would ensure that seniors never get a fair COLA by shifting to the Chained-CPI which would significantly understate inflation for seniors.
- The Social Security Administration's Chief Actuary has estimated that moving to a chained CPI would mean that Social Security recipients who retire at age 65 and receive average benefits would get $560 less a year at age 75 than they would under current law and get $1,000 less a year at age 85.
- Cuts Medicare by at least $298 billion over 10 years.
Holds Deficit Reduction Hostage to Cutting Social Security benefits
- If the Gang of Six deficit reduction plan receives 60 votes, it will not be sent to the House until and unless the Senate also adopts a plan to reform Social Security so that it is solvent for the next 75 years.\If 60 Senators don't vote to approve an undefined 75-year Social Security solvency bill, the deficit reduction plan dies, even if 60 Senators voted to approve it.
- Social Security is solvent for the next 25 years. No other government program can make that claim.