The Grand Bargain Executive Summary On August 6, 2011, the S&P handed the United States its first

credit downgrade in its storied history. Citing a drastic confidence drop in the ability of the US political system to reach adequate and effective economic compromise and concerns over the amount of that deal, the S&P bluntly struck a blow at the American credit rating. Thus, to rectify confidence concerns from both credit institutions as well as private investors, a comprehensive debt solution must be reached as to address both the scope and depth of our current economic troubles. Such a measure would serve as a show of force to financial markets (akin to what Europe must do with its Euro) and restructure the American tax system and economy for long term solvency and strength. Our proposal would raise approximately $650 billion in new revenue streams for approximately $2.8 trillion in spending cuts and the added stimulus of cut corporate tax rates and an infrastructure bank for a very Bowles-Simpson-y 4:1 spending cuts to new revenues ratio and cutting the deficit by ~$3.5 trillion. Therefore, it is imperative that this committee actively pursue and pass the big $4 trillion solution. . Decreasing levels of spending, raising revenue paralleling rectifying the income inequality gap, and seizing the opportunity to restructure the American economy for the long term would send a powerful message of political strength rather the political paralysis, a formula for growth rather than stagnation, and finally a commitment to effective governance rather than a nonresponsive institution.

Compromise Data Reform of the Tax Code Cut to Three Income Tax Brackets Married Filed Separately $0-$34,500 $34,501-$106,150 $106,151+ Head of Household $0-$46,250 $46,251-$193,350 $193,351+

Marginal Tax Rate

Single

Married Filing Jointly/ Qualified Widower $0-$69,000 $69,001-$212,300 $201,301+ Only Deduction is the Child Tax Credit

8% $0-34,500 $34,50115% $174,400 26% $174,001+ o -

Capital Gains Tax will be 0% for individuals making <$175,000 and 15% for individuals making >$175,000

Effects o Using 2011 total tax revenue figure- $1.5946 trillion and this chart

New Revenue steam should amount to very roughly ~$450-$500 billion/10 years in new tax revenues

Corporate Tax The Corporate Tax Rate will be lowered to 24% All deductions and exemptions will be removed with the exception of the following: o o The Research and Development Tax Credit The Patent Baby Tax Credit

Spending Cuts Discretionary Spending Discretionary spending will be subject to a freeze until fiscal year 2015 Thereafter, its cap will rise in accordance with GDP+1%

Effect- Should reduce spending by ~1.15 trillion/10years

Military Spending There will be a net 275,000 reduction in troop count over 10 years o o 90,000 shall come from the drawdown in the Wars in Iraq and Afghanistan 80,000 shall come from the reductions in overseas bases o 50,000 from Europe 30,000 from East Asia

100,000 shall come from reducing the domestic peacetime troop presence

Military Procurement will be reduced by 15% with the vast majority derived from the decreased demand for supplies for the positions reduced above

Note- Savings will be slightly less than graph indicates as this Super Committee chose to keep veterans health benefits as well as the majority of research intact Effect- Actual Savings should amount to ~$850 billion/10 years

Entitlement Spending In accordance with Bowles Simpson Retirement ages will be raised saving ~$300 billion/10 years o o 692050 702070

The maximum income subject to the Payroll Tax shall gradually be raised to $150,000 and tethered to inflation thereafter raising ~130 billion/10 years

Benefits will be means tested and tethered to the chained CPI Index thereafter saving ~50 billion/10 years

Infrastructure Bank Currently American investors have over $1 trillion overseas with a fear of an immediate 35% tax imposed if those funds return to US shores A tax holiday will be instituted for these funds with the express stipulation that the untaxed funds be invested into a created joint public-private infrastructure bank Assuming (Brookings) the procurement of roughly 10% ($100 billion+), these acquired funds will be leveraged appropriately to amount to approximately $1 trillion for the development and construction of infrastructure across the United States

Gains Summary Gains Tax Reform Entitlement Spending Cuts Democrats More Progressive Broadened Payroll base Military will be cut Peacetime count reduced Republicans Lower Tax Rates Higher Retirement Age Freeze on Discretionary Spending Capped thereafter