Ladies and Gentleman, please welcome back, Simpson and Bowles!
Alan Simpson, a Republican and Democrat Erskine Bowles have come up with a new deficit reduction plan. You will recall that the duo were co-chairs of the White House’s 2010 deficit-reduction panel, which put together a bipartisan package of tax and spending changes. That plan, of course, famously went nowhere. It was DOA. But the two men have at it again and say their new proposal would reduce the federal budget deficit by $2.4 trillion over ten years. That significantly more than the White House’s stated goal of the $1.5 trillion.
Simpson and Bowles make sense again this time, but common sense these days is not the motivator it occasionally has been in the past in Washington. They insist on aggressive spending cuts but attack the “abrupt, mindless, and across-the-board spending cuts” of the looming sequester. Cuts in Medicare and Medicaid, cuts that end tax breaks, and tax loophole closures are in there. They also suggest reforms that promote rather than disrupt the economy, reduce debt to less than 70 percent of GDP (its 73 percent now and trending up) and keep it shrinking, protect the disadvantaged when cuts are made to social programs, control rising health care costs better, and protect the credit and reputation of the United States government.
The new plan is not really a surprise, the two deficit hawks have tried a number of times to step between the parties, a bold move in itself, but have constantly run into the intransigence of our “I’m always right you’re always wrong” political polarity. With the deep sequestration cuts due to kick in March 1, the two men are trying to give lawmakers some common ground for compromise. The budget cuts/tax increases teeter-totter is the key machinery, and they have given politicians a potential middle ground. But it’s unlikely many of them will wander into that DMZ. Recall that the fiscal cliff came and then they did something. Odds are the sequester will come. And then they’ll do something.
If there is to be any compromise it will have to look something like this latest Simpson/Bowles act. Any proposals that wander away from this middle ground will be toast. We know neither party will “win” on the sequester or long term budget and tax policy in the next few weeks and months. Its just a question of who gives the most and is perceived to have lost their nerve. And when you play the game that way, common sense and solid long-term planning tend to get lost in the dust.