By Teresa Welsh |
Bowles-Simpson 1.0 was bad policy and bad politics, and Bowles Simpson 2.0 may be even worse, depending on the details. Both plans are heavily weighted towards the interests of Wall Street and the wealthiest Americans and against the interests of working people.
Bowles-Simpson 1.0 cut income tax rates for corporations and the wealthy and eliminated taxes on overseas corporate profits, which would actually increase the tax incentive for sending jobs overseas. It paid for these lower tax rates by, among other things, cutting Social Security benefits, shifting costs to Medicare beneficiaries, and taxing workers' health benefits.
Bowles-Simpson 2.0 likewise cuts income tax rates for corporations and the wealthiest Americans, and pays for these lower tax rates by cutting Social Security cost-of-living adjustments, shifting costs to Medicare beneficiaries, and (almost certainly) taxing workers' health benefits.
These are all really bad ideas. So why do so many people in Washington seem to care that Erskine Bowles and Alan Simpson think they are good ones?
Is it because Bowles and Simpson are acting in some kind of official capacity? No, they are just two private citizens issuing opinions, as should be clear from their newest proposal.
Is it because Bowles and Simpson have unique expertise in budgeting or economic policy? No, Bowles told Ezra Klein that he and Simpson were not even trying to develop ideal budget policy. They were just "trying to put out something that could get done" by splitting the difference between the Democratic and Republican budget offers in December. This is why the new Bowles-Simpson plan has a higher ratio of spending cuts to tax revenue than the old one did.
However, Bowles and Simpson have so far not demonstrated any special expertise in discerning what is possible to get done in Washington. They are also not very good at determining what the midpoint in this debate is. In fact, giving tax breaks to Wall Street and the wealthiest Americans is wildly unpopular, as is cutting Medicare and Social Security benefits. This should have been obvious from the last election.
About Kelly Ross Deputy Policy Director at AFL-CIO
Dean Baker Codirector of the Center for Economic and Policy Research
Alan Simpson Former Senator
Alex Brill Research Fellow at the American Enterprise Institute