The names Alan Simpson and Erskine Bowles have become synonymous with deficit-cutting, as the two men have been calling for spending cuts and revenue increases for years. Now the men who headed up President Barack Obama's 2010 National Commission on Fiscal Responsibility and Reform are once again leading the fiscal policy discussion, with another deficit-cutting plan. But in a politically polarized Washington, it could easily fall on deaf ears as in years past, even from these two highly respected men.
On Friday, Simpson and Bowles offered details to their February deficit reduction plan, which aims to achieve a total of $5.2 trillion in deficit-cutting over the next 10 years. Simpson, a former Republican senator, and Bowles, a former White House Chief of Staff for President Bill Clinton, build upon deficit-reduction steps Washington has already taken in recent years. Their plan would end the automatic sequestration cuts enacted in March. In addition to $2.7 trillion in savings, Simpson-Bowles would further cut $2.5 trillion from the deficit.
At an event unveiling the plan's details on Friday, Bowles said lawmakers have already "done the easy stuff" and the "stupid stuff" in cutting deficits, but that now it's time for tougher choices.
"Now we have to get serious and do the really hard stuff that could really structurally make a difference – a long-term difference," he said.
That "hard stuff" includes a broad array of spending cuts and tax code reform proposals. Bowles and Simpson want to reform Medicare and Medicaid by reducing drug costs, reducing provider payments and increasing premiums for high earners. Altogether, they would cut healthcare spending by an additional $585 billion during the next 10 years, above and beyond savings already enacted. Their plan also "eliminates or scales back" tax loopholes, seeks to reform farm subsidies and higher education spending, and further limit discretionary spending.
The proposal is more modest than the original Simpson-Bowles plan, which would have cut deficits by more than $6 billion over 10 years. It also offers a smaller proportion of savings from new revenues than the original Simpson-Bowles plan. That proposal failed in the House of Representatives and never gained unequivocal White House support.
However, it is more ambitious than Obama's 2014 fiscal year budget proposal, released last week. Simpson-Bowles 2.0 would cut deficits by $2.5 trillion, while the president's new budget would have only reduced the deficit by $1.8 trillion over 10 years. Bowles spoke approvingly on Friday of the steps toward compromise in Obama's budget, which notably included a move toward using the chained CPI in calculating Social Security benefits. Still, Bowles and Simpson don't believe that budget goes far enough.
"While the president's proposal is a step in the right direction, it does not go as far as we believe is necessary to put our nation's fiscal house in order," the men said in a statement last week on Obama's 2014 budget proposal.
They also took aim on Friday at budget plans proposed by the House and Senate, saying those proposals were primarily intended to score partisan points.
"Both of them were more political documents than they were reality," said Bowles.
A highly polarized Congress has made budget passage impossible in recent years. The Senate has not successfully passed a budget since 2009. Given those difficulties, a new plan from Bowles and Simpson – especially one that aims to change popular programs like Medicare, Social Security and farm subsidies – could be difficult to pass at best, and impossible at worst.