Alan Simpson and Erskine Bowles, the co-chairmen of President Obama’s deficit-reduction commission, unveiled a new framework to cut deficits by $2.4 trillion over the next decade dubbed the Simpson-Bowles Deficit-Reduction Plan. The plan would seek to limit federal spending on health care (Medicare and Medical), gradually raise the retirement age, lower the corporate tax rate to 26%, and cut spending by the Pentagon.
“The problem is real, the solutions are painful, and there is no easy way out,” said Bowles and Simpson, who have pressed leaders to embrace their deficit-reduction plans for a couple of years. “What we are calling for is by no means perfect. We understand that there will be disagreements among policymakers and experts about the exact approaches to achieve deficit reduction, and welcome their commentary.”
The plan would also place limits on tax breaks for homeowners by removing deductions of interest on second homes, home-equity loans and mortgages worth more than $500,000. Such a cut would have the biggest effect on owners in expensive urban centers around the U.S., as well as most of the West Coast, where home prices are among the highest in the country, according to The Los Angeles Times.
The plan however was defeated in Congress in 2013. The removal of the $500k cap never happened to know what it's results would have been.