I embrace the Bowles-Simpson plan because it's better than doing nothing, and nothing is probably what we'll end up doing. Their plan to slow the growth of spending (primarily on the elderly and near-elderly) and to raise tax revenues (primarily by taking away popular tax preferences) is just a broad framework, not a line-by-line plan. But even at this distance, it's easy to tell that it's far better, and far wiser, than the real alternative: A few more years of the status quo, a few more years of piling up massive debt, a few more years of letting taxpayers and the near-elderly believe that maybe we don't need any big changes in government policy.
Other plans are out there proposed by both left and right. But none is going to pass, so time spent discussing them is time spent weakening the chances of Bowles-Simpson. Their plan is too centrist, and too bipartisan, for the media and the pundits to ignore.
Some will complain, "I paid for these retirement benefits; I deserve them." Of course tens of millions of citizens paid taxes and were promised benefits. But to take a key example: Even if Medicare spending grows more slowly than in the past, the average person on Medicare will receive far better health services than her ancestors did back in the '60s or '70s. The investment has paid off. Ideally, that payoff would be higher and Medicare would be more effective. But even as it stands it provides a good return.
And fans of tax cuts should remember: Taxes only exist to pay for past or future spending. That means that every credible spending cut is a future tax cut—and every halfway-credible spending cut is half of a future tax cut. Yes, politicians backpedal on spending cuts but if even half of the Bowles-Simpson spending cuts remain intact our nation will make substantial progress toward fiscal stability. Every day we go without curbing spending growth means either bigger tax increases or bigger spending cuts in the future. And if Congress rejects Bowles-Simpson, we will go a lot of days without substantially curbing spending growth.
We could do worse than the latest Bowles-Simpson plan; we probably will.
About Garett Jones Associate Professor of Economics at George Mason University
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