Simpson and Bowles Keep Pushing With New Deficit Plan

PHOTO: Co-chairmen of the National Commission on Fiscal Responsibility and Reform, Erskine Bowles, left, and former Sen. Alan Simpson, (R-WY) right, participate in a Joint Deficit Reduction Committee hearing on Capitol Hill, Nov. 1, 2011, in Washington,

Alan Simpson and Erskine Bowles are at it again.

Their broad deficit-reduction proposal failed to catch on following its release in December 2010, but the two have remained vocal about the nation's fiscal future. In a recent op-ed at Politico, they called the recent, year-end tax deal "pitiful," and urged serious, long-term reforms.

Read more: Sequestration: DC's Weird Idea of a Cut

Now, they're pushing a re-hashed plan to slow the nation's debt growth and put it on a more stable path, essentially fitting their old plan into a new timeline and pushing leaders in Washington, D.C., to adopt a piecemeal approach to fiscal reform. Taking into account actions that Congress and President Obama have taken in the last two years, Simpson and Bowles say tax and spending reforms don't have to happen all at once.

The two appeared at a breakfast hosted by Politico in downtown, Washington, D.C., Tuesday morning to promote the plan, telling the small Beltway audience that they believe a broad "grand bargain" agreement on these steps is attainable. Protesters repeatedly interrupted their onstage interview with Politico's Mike Allen, demanding Simpson and Bowles explain their calls for entitlement cuts and shouting "Pay your fair share!"

"Forget all the fear, guilt, and racism that goes into this and use your brain," Simpson said of critics, while warning that a meaningful deal is necessary for President Obama.

"He will have a failed presidency," Simpson said, if Obama fails to shift the nation's fiscal course.

Counting the 2011 budget talks and the recent tax deal as steps one and two, Simpson and Bowles issued a call for two more big steps—which include measures like lowering the growth of Medicare and Medicaid payments to providers, lowering drug costs, enacting Social Security reforms, adopting a "chained CPI" to reduce the growth of Social Security payments and other spending tied to inflation, and reforming the tax code. Those proposals (or, at very least, proposals like them) were included in the original plan approved by President Obama's fiscal commission, which Simpson and Bowles led. That plan offered more specifics on how to achieve the goals laid out by Simpson and Bowles this morning.

Read more: Bowles, Simpson Protested at Politico Breakfast

Most of these remaining steps should happen in the next two years, according to Simpson and Bowles's timeline.

"There is no perfect solution to our fiscal problems," the two wrote, introducing the new plan. "However, we believe strongly and sincerely that an agreement on a comprehensive plan to bring our debt under control is possible if both sides are able to put their sacred cows on the table in the spirit of principled compromised." They also took Congress and President Obama to task once again for the year-end tax deal, blasting it for leaving in place "the abrupt, mindless, and across-the-board spending cuts of the sequester."

Here is the list Simpson and Bowles released to reporters, detailing their plan:

Step 3: Enact Serious Tax and Entitlement Reforms and Cut Additional Spending (~$2.4 trillion)

  • Reduce Medicare and Medicaid spending by improving provider and beneficiary incentives throughout the health care system, reducing provider payments, reforming cost-sharing, increasing premiums for higher earners, adjusting benefits to account for population aging, reducing drug costs, and getting better value for our health care dollars (Feb-Dec 2013)
  • Enact comprehensive, pro-growth tax reform that eliminates or scales back most tax expenditures, with a portion of the savings dedicated to deficit reduction and the rest used to reduce rates and simplify the tax code (Feb-Dec 2013)
  • Strengthen limits on discretionary spending (Feb-Dec 2013)
  • Reduce non-health mandatory spending by reforming farm subsidies, modernizing civilian and military health and retirement programs, imposing various user fees, reforming higher education spending, and making other changes (Feb-Dec 2013)

  • Adopt chained CPI for indexing and achieve savings from program integrity (Feb-Dec 2013)

Step 4: Make Social Security and Highway Funding Solvent and Medicare Sustainable

  • Require reforms on a separate track to make Social Security sustainably solvent (2013)
  • Require a highway bill to bring transportation spending and revenues in line (2014)
  • Require additional reforms of federal health care programs if necessary to limit the growth of the per beneficiary federal health commitment to close to GDP growth (2018)

Simpson, a former GOP senator from Wyoming, and Bowles, a Democrat who served as President Clinton's chief of staff, have gained a reputation as centrist deficit-cutters. But their 2010 plan exposed the problem with centrism in a time of extreme partisanship, and both sides fled their deficit plan with extreme speed.

Two years later, Simpson and Bowles evidently hope that politics have changed enough to make their reforms more palatable.

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