Pages from fiscal_covers.pdfReport Draft 4 AM 12-1Military and civilian pensions are both out of line with pension benefits available to the average worker in the private sector, and in some cases, out of line with each other across different categories of federal employment. The Commission recommen...Use the highest five years of earnings to calculate civil service pension benefits for new retirees (CSRS and FERS), rather than the highest three years prescribed under current law, to bring the benefit calculation in line with the private sector sta...(Saves $500 million in 2015, $5 billion through 2020)Defer Cost of Living Adjustment (COLA) for retirees in the current system until age 62, including for civilian and military retirees who retire well before a conventional retirement age. In place of annual increases, provide a one-time catch-up adjus...(Saves $5 billion in 2015, $17 billion through 2020)Adjust the ratio of employer/employee contributions to federal employee pension plans to equalize contributions.(Saves $4 billion in 2015, $51 billion through 2020)(Saves $1 billion in 2015, $10 billion through 2020)(Saves $5 billion in 2015, $43 billion through 2020)(Saves $2 billion in 2015, $16 billion through 2020)(Saves $1 billion in 2015, $8 billion through 2020)D E C E M B E R 2 0 1 0T H E NAT IONA L COM M IS SION ON F ISCA L R E SP ONSI BI L I T Y A N D R EF OR MThe Moment of TruthThe Moment of Truth REPORT OF THE NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM December 2010The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform 3Table of Contents Preamble ....................................................................................................................................................................................6 The Mission ...............................................................................................................................................................................8 The Looming Fiscal Crisis .......................................................................................................................................... 10 Our Guiding Principles and Values ...................................................................................................................... 12 Overview ............................................................................................................................................................................. 14 The Plan ................................................................................................................................................................................... 18 I. Discretionary Spending Cuts ................................................................................................................... 20 II. Tax Reform ........................................................................................................................................................ 28 III. Health Policies ................................................................................................................................................. 36 IV. Other Mandatory Policies .......................................................................................................................... 44 V. Social Security .................................................................................................................................................. 48 VI. Process Reform ............................................................................................................................................... 56 Appendix .................................................................................................................................................................................. 60The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform 5 Tables and Figures Figure 1: Debt as a percent of GDP ............................................................................................................................ 10 Figure 2: Annual Deficits Under Commission Proposal (as percent of GDP) .................................... 14 Figure 3: Deficit Reduction Under Commission Proposal (in billions)................................................. 15 Figure 4: Federal Outlays, Revenue, Deficit, and Debt Under Commission Proposal (as percent of GDP) .................................................................................................................................................................... 16 Figure 5: Discretionary Path Under Commission Proposal ........................................................................ 21 Figure 6: Tax Rates Under Various Scenarios ..................................................................................................... 29 Figure 7: Illustrative Individual Tax Reform Plan ............................................................................................ 31 Figure 8: Illustrative Distributional Analysis ..................................................................................................... 32 Figure 9: Illustrative Corporate Tax Reform Plan ............................................................................................ 33 Figure 10: Commission Social Security Plan and Present Law as Percent of Taxable Payroll 49 Figure 11: Social Security Bend Points ................................................................................................................... 49 Figure 12: Social Security Reform Provisions ..................................................................................................... 54 Figure 13: Social Security Distributional Analysis ........................................................................................... 55 Figure 14: Bridge From Current Law to Plausible Baseline ........................................................................ 62 Figure 15: Plausible Baseline ....................................................................................................................................... 63 Figure 16: Commission Plan ......................................................................................................................................... 64 Figure 17: Effect of Commission Plan on Deficits