By Teresa Welsh |
The Bowles-Simpson plan is back, and like most sequels, it's worse. The old plan, with all of its antiworker and antisenior proposals, could at least be said to include a roughly equal amount of spending cuts and revenues. The new plan endorses deeper cuts to programs that help middle class and working families while raising less revenue than the prior proposal.
The fundamental problem with Bowles-Simpson is that it's based on the assumption that we need to starve low-income families, seniors, and the middle class while giving tax breaks to the very wealthy and big corporations. While this is morally offensive, it's also bad economics. It gives money to people who don't need it and won't use it to create new jobs, and it takes money from people who do need it and will spend it and actually generate jobs in the process.
Any plan that addresses our nation's fiscal challenges should meet three goals: It should create jobs, it should increase the economic and health security of the middle class and those working their way into it, and it should make the wealthiest Americans pay their fair share in taxes. Bowles-Simpson fails all three tests.
A balanced and fair approach should begin by closing corporate tax loopholes and ending special-interest tax breaks. For example, we should stop rewarding corporations that ship jobs overseas with $606 billion over 10 years. Instead of making seniors pay more for Medicare, we should use Medicare's market share to reduce prescription drug prices from the pharmaceutical companies. That could save hundreds of billions of dollars over the next 10 years.
We should also put a check on the Wall Street traders who crashed our economy by applying a transaction tax that would help slow down high-frequency securities trading. This tax of only three pennies for every $100 in transactions would raise approximately $352 billion over 10 years.
But fair corporate taxes aren't in Bowles-Simpson, which is one of the reasons its chief cheerleader is Fix the Debt, a corporate-backed $60 million campaign to preserve corporate tax breaks while cutting things like Medicare and Social Security, the bedrock of a secure retirement for the vast majority of Americans.
The leaders of Fix the Debt—including Alan Simpson and Erskine Bowles—have the wrong priorities. While the median income for seniors is about $22,000 a year, a dozen Fix the Debt CEOs have the pension assets to retire at 65 with $110,000 a month for life. It's no wonder their plan is so out of whack.
About Ethan Rome Executive Director of Health Care for America Now
Dean Baker Codirector of the Center for Economic and Policy Research
Alan Simpson Former Senator
Kelly Ross Deputy Policy Director at AFL-CIO
Alex Brill Research Fellow at the American Enterprise Institute