It looks like the Obama administration may be inching closer to an embrace of the Simpson-Bowles deficit reduction plan. Addressing the Council on Foreign Relations Wednesday afternoon, Treasury Secretary Timothy Geithner said that the debate about the path to fiscal responsibility "really began with Bowles-Simpson and that's where it's going to end."
He added that while the president's Fiscal Year 2013 budget "differs in slight--in small respects from that basic framework, [it] is very close to that basic design. That's the neighborhood in which we've planned to govern."
Since the National Commission on Fiscal Responsibility and Reform released its report in late 2010, President Obama has been criticized by moderates and fiscal hawks in both parties for not having embraced the plan from the start. In fairness, he was discouraged from supporting the plan too publicly because what Obama praises comes under reflexive fire from many Republicans. Since then, the president has supported some parts of the plan but as recently as February, Geithner told the Senate Budget Committee that the administration couldn't get behind the plan because its cuts in defense spending and Social Security were too deep.
Now, Geithner says, such a plan is "the only path to resolution politically [and] growing essentially economically, and I think that's where it's going to end up."
The key, he said, is a plan that has both "tax reforms that raise a modest amount of revenue tied to spending savings across the government that's still preserving some room to invest in things that matter to how we grow moving forward." If both sides can come to such an agreement, Geithner said, it would be helpful to confidence. "There's no plausible way to get there economically or politically without that kind of balanced framework again that marries tax reform with broader spending reforms," he said.
Since its unveiling, Simpson-Bowles has gotten a presidential cold shoulder and been voted down in the House, but it won't seem to go away. In coming weeks Democratic Sen. Max Baucus of Montana is going to hold a hearing on the plan as well. Stay tuned.