Few view the blunt sequestration cuts set to begin on Friday as ideal policy, yet budget hawks worry that non-action on the deficit would leave in place a growing debt dynamic that has fostered only economic stagnation.
To that end, the Brookings Institution’s Hamilton Project convened a roundtable discussion of budget experts Tuesday in Washington to consider “innovative, pragmatic proposals for lowering the deficit by reducing expenditures or raising revenues.”
Graff added that while Dynan’s proposal acknowledges wealthy savers could move their funds to other savings vehicles, “what it fails to acknowledge is when that double-taxed person is a small business owner and it no longer makes sense for the owner to have a 401(k) plan, that owner probably won’t offer a 401(k) plan to the employees, either.”
The Hamilton Project’s 14 other policy proposals were no less controversial. Advisors will be particularly interested in proposals 7, 8 and 10, which would reduce individual tax deductions and exclusions; replace the mortgage interest deduction with a refundable credit; and institute an American valued-added tax (VAT). Those three proposals would reduce the deficit over 10 years by $1 trillion, $300 billion and $1.6 trillion, respectively.