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Deficit panel

This morning brought news that according to the CBO (Congressional Budget Office) a failure to implement the planned 30% reduction in Medicare payments and a decision to extend the Bush tax cuts would add $5 trillion to the federal deficit over the next decade. That is sobering news for the Joint Committee on Deficit Reduction which has until Thanksgiving to find $1 trillion in deficit reduction measures.This morning’s Scott Burns column was labeled “Are our nest eggs adding to the deficit?” In response to a reader’s question and drawing on numbers issued by the Joint Committee on Taxation he lists the cost of several items to the Treasury over a 5 year period.

  • Defined benefit pension plans $303.2 billion
  • Defined contribution plans $212.2
  • Traditional IRA’s $85.6 billion
  • Keogh-type plans *81.1 billion
  • Roth IRA’s $23.9 billion
  • Capital gains tax reduction $402.9 billion
  • Corporate cafeteria benefits $163.1 billion
  • Health care insurance $659.4 billion
  • Mortgage interest $484.1 billion
  • Property taxes $120.9 billion

That adds up to roughly $2.5 trillion all of which goes to people with money, good jobs with benefits, and their own homes. Closing these tax benefits would go a long way to reducing the Federal deficit. Let’s hope the panel has the courage to look at a few of these. Just the elimination of the deduction of mortgage interest would go a long way to creating that $1 trillion cut that the panel is tasked to find.

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