Emerging Deficit Reduction Plan Would Adversely Impact Middle-Class Vermonters
As Vermonters packed their cars for Thanksgiving, they were greeted by gas prices of more than $3 a gallon - the highest level in two years. If ideas emerging from the president's deficit commission are enacted, federal gas taxes would increase by another 15 cents a gallon. But that's not all, plans are being outlined to rollback Social Security benefits and increase the tax burden on middle-class families.
"This would be a disaster for working Americans in rural areas," Sen. Bernie Sanders (I-Vt.) said of adding 15 cents in taxes to every gallon of gas. "Instead of raising this regressive gas tax, we should impose a windfall profits tax on big oil and tax oil speculators who are driving up the price of oil."
Gas prices have a more profound impact on Vermonters since there are few public transportation options and commutes tend to be long. The average Vermonter commutes 165 miles during a five-day work week, according to data from the Vermont Agency of Transportation. Vermonters paid an average of $3.10 a gallon for regular unleaded on Monday, according to AAA.
"Middle-class families would certainly feel the pinch of an extra 15 cents a gallon in tax. But that's just the beginning," Sanders said. "The plan being pitched by the co-chairmen of the president's deficit commission does more than just raise gas taxes. It could rollback Social Security benefits, increase the tax burden on middle-class families, eliminate the home mortgage interest deduction, increase premiums for Medicare, undercut support for our veterans, and make it more expensive to obtain an education."
"These are not good ideas. While we must reduce the debt, it must not be balanced on the backs of students, middle-class families, veterans and seniors," Sanders said. "There is a better approach. We must have a thoughtful debate on the best and fairest way to reduce the debt."
"We've got to do away with the enormous tax breaks and loop-holes that have been given to millionaires and billionaires and take a hard look at the excessive amount of money we spend on the military as well as some other government agencies," Sanders said.
Sanders met with progressive leaders in Washington, D.C. last month to begin to develop an alternative plan to reduce the $13.8 trillion national debt. Sanders also has encouraged people to share their own ideas with him on how best to reduce the debt. So far, he has received more than 1, 200 comments through Facebook and e-mail and more than 100 thoughtful essays on the subject.
"Everyone agrees that over the long-term we have got to reduce the record-breaking $13.8 trillion national debt and unsustainable federal deficit," Sanders said.
One of the misguided ideas of the Bowles-Simpson plan, named after the deficit commissions' chairmen is to increase the loan balance that current and future college students must repay after they graduate. Specifically, their plan calls for interest to accumulate while a student is in college and graduate school. Currently, the federal government pays in-school interest subsidies to cover all interest costs, so no interest is charged to the student loan until graduation.
The president formed the National Commission on Fiscal Responsibility to develop a plan to reduce the debt. The commission's co-chairmen - former Sen. Alan Simpson and Erskine Bowles, President Bill Clinton's former chief of staff - have outlined their proposals that included major cuts for seniors, college students, working families and vulnerable Americans. The plan failed to gain the support of the full commission late last week, but the proposals indicate many are looking to the middle class to reduce the debt.
Here are some of the cuts Simpson and Bowles outlined:
- Eroding Social Security: Cutting retirement benefits by more than 35 percent for young people entering the workforce today. Today's 20-year-old workers who retire at age 65 would see their benefits cut by 17 percent if their wages average $43,000 over their working lives. The proposal would also raise the retirement age for the next generation of Americans to 69 (Retirement age would rise to 68 in 2050 and 69 in 2075).
- Increasing the Tax Burden on Middle-Class Families: a) Eliminating the home mortgage interest deduction entirely, tax relief that is widely used by middle-class families already struggling to make ends meet as a result of the largest economic downturn since the Great Depression. b) Eliminating the Child Tax Credit used by millions of middle-class families. c) Eliminating the Earned Income Tax Credit that has kept millions of Americans from slipping into poverty d) Increasing the federal gas tax by 15 cents a gallon in 2013, an increase that would be a hardship for rural Americans who commute long distances.
- Making Education More Expensive: Increasing the interest rates on student loans, making it harder for people to afford a quality education.
- Undercut Support for our Veterans: The proposal would cut pensions of military employees, freeze noncombat military pay and increase co-payments for middle-class veterans receiving health care through the VA.
"I was very disappointed by the outline presented by Alan Simpson and Erskine Bowles. It is no surprise that these two favor draconian cuts to Social Security, Medicare, Medicaid, the needs of our veterans, and education while proposing tax reductions for the wealthy and large profitable corporations," Sanders said. Simpson is a darling of the Republican right wing and Bowles is a former investment banker who made a fortune on Wall Street.
"We all know that there are a number of fair ways to reduce deficits without harming the middle class and those who have already lost their jobs, homes, life savings and ability to send their kids to college," Sanders said. "The time has come to put these proposals into a package so that a fair and progressive deficit reduction plan will become part of the national discussion."
