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Congress / ANALYSIS

The Legend of Simpson-Bowles

President Barack Obama reaches out to National Commission on Fiscal Responsibility and Reform Co-Chairmen, former White House Chief of Staff Erskine Bowles, left, and former Wyoming Sen. Alan Simpson, as they leave the Rose Garden of the White House in Washington, Tuesday, April 27, 2010.   (AP Photo/J. Scott Applewhite)

August 17, 2012

Coming this holiday season! From the people who brought you the most acclaimed, misconstrued, pain-laden tax and budget plan of all time! 

Simpson-Bowles: The Sequel. 

A crowd of ex-politicians and business executives, led by former Sens. Judd Gregg, R-N.H., and Alan Simpson, R-Wyo., former Pennsylvania Gov. Ed Rendell, and former White House Chief of Staff Erskine Bowles have been working behind closed doors on Simpson-Bowles 2.0.

 

If all goes well, this updated deficit-reduction plan, with fresh new segments on health care policy and taxes, will be unveiled after the election, when Congress confronts the fiscal cliff and must decide the fate of trillions of dollars in expiring tax provisions and spending cuts.

Amidst the expected chaos, the relaunch of the National Commission on Fiscal Responsibility and Reform proposal, as it is properly known, could become the de facto template.

“Simpson-Bowles is a brand that’s very well accepted by most Americans,” says Gregg, the former chairman of the Senate Budget Committee. “It’s a vehicle that has great credibility, because it’s the only vehicle that is bipartisan and substantial on fiscal reform. It’s a hugely significant starting point.”

To build support for the plan, Gregg and Bowles have met with a bipartisan group of roughly 40 senators who are wrestling with the end-of-the-year tax and spending questions. The group has hosted discussions and dinners with think-tank scholars from the Concord Coalition and the American Enterprise Institute, as well as with roughly 100 executives from Fortune 500 companies.

Momentum may be building. Hardly a day goes by in Congress or on the hustings without some lawmaker extolling Simpson-Bowles as the kind of potent fiscal medicine Americans must swallow if the country is to fix its debt and deficit problems, reform government and revive the economy. It’s becoming all things to all women and men. 

When President Obama and Mitt Romney want to demonstrate they are bonafide fiscal tigers, they cite Simpson-Bowles. When the tax- and budget-panel chairmen and their corresponding ranking members assure their constituencies that there is light in the gloom, they point to Simpson-Bowles. House Minority Leader Nancy Pelosi and her lieutenants praise its fiscal formulas. Senate Minority Leader Mitch McConnell and his captains hail its call for discipline. Speaker John Boehner calls it “the menu” that guided him during budget negotiations with the White House.

“The Bowles-Simpson group is the best example of what can be accomplished,” says Sen. Joe Manchin, D-W.Va. It can serve as “a consensus bipartisan template.”

It offers “a conscientious way to address the debt and deficit,” says Sen. Johnny Isakson, R-Ga.

Simpson-Bowles helped foster and fuel the ongoing push for tax reform. The commission was for changing Medicare before changing Medicare was cool. There is a growing feeling on Capitol Hill, says Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, that something like the Simpson-Bowles “framework” will ultimately be passed by Congress and feted at a signing ceremony on a sunny South Lawn.

Something like. There’s the rub.

There is a reason that so few of the commission’s 70-odd recommendations — and none of its major planks — have made it past the hypothetical. Simpson-Bowles hurts. Devils rage in its details. The original report calls for huge helpings of higher taxes; cuts in benefits for the elderly, veterans, and government employees; and elimination of coveted special-interest tax breaks and subsidies for Washington’s most powerful and deep-pocketed lobbies — oil, pharmaceuticals, finance, defense, health care, insurance, and real estate, to name a few.

Conservatives at the Heritage Foundation and Americans for Tax Reform despise the tax provisions. Liberals in ivory towers such as the Center on Budget and Policy Priorities gag on its cuts in Social Security, Medicare, and other safety-net programs. When a legislative imitation of Simpson-Bowles hit the House floor in March, Republicans and Democrats deserted in droves; it failed on a 382-38 vote.

Republicans are adamantly opposed to the Simpson-Bowles tax hikes. The commission would let the President George W. Bush-era tax cuts expire; end the preferential treatment of capital gains and dividends; apply a means test to popular deductions; hike the federal gas tax by 15 cents a gallon; and eliminate $ 1 trillion in special-interest tax breaks. It also calls for deep defense cuts.

When Romney told Fox News’ Sean Hannity earlier this month that “my plan is very similar to the Simpson-Bowles plan,” it left most of Washington wondering how such a highly intelligent, well-educated, and accomplished executive failed to grasp the meaning of “very” and “similar.”

Indeed, Rep. Paul Ryan, R-Wis., who served on the Simpson-Bowles commission, cast one of the pivotal “nays” on Dec. 3, 2010, that kept the proposal from being referred for debate and guaranteed a vote in Congress.

The domestic cuts were too little, Ryan said, and the defense cuts too large. “The revenue increases called for in this proposal are simply too high,” he wrote then, and  “the fundamental weakness in the … proposal is its failure to structurally reform” Medicare and Medicaid into the premium-voucher system and block-grant programs embodied in the Ryan budget plan.

“There is a lot of loose talk that sometimes goes unchallenged … about who actually supports the principles behind the Simpson-Bowles commission,” White House press secretary Jay Carney said recently. When Romney aligns himself with Simpson-Bowles, “those statements are incompatible with the facts and the truth.”

But Obama’s Democrats have their own compatibility problems. The White House deserted the Simpson-Bowles plan when it was released on Dec. 1, 2010, and has failed to implement its major recommendations.

Like the Republicans, Democrats cherry-pick. Pelosi, for example, says she is all for Simpson-Bowles, except for that pesky Social Security part.

That "part" would be the Simpson-Bowles proposals to increase the retirement age over the next 50 years from 66 to 69 and the age for early retirement from 62 to 64. This would result, under Social Security formulas, in a 7 percent reduction in benefits for every year the full retirement age is increased, says the Center on Budget and Policy Priorities. At the same time, elderly and disabled Medicare beneficiaries would have to pay higher out-of-pocket expenses.

Liberals quail, as well, at the way Simpson-Bowles would cap federal revenue and spending at 21 percent of gross domestic product and limit the rate of growth of federal health care costs for the poor, the elderly, children, veterans and military families, to the growth of GDP plus 1 percent. 

Various Democratic interest groups shudder at the proposals to freeze pay for federal workers, slice military and civilian pensions, cut the federal workforce by 10 percent, end congressional earmarks, reform the tort system, cut the corporate tax rate, and adopt a “territorial” tax system for multinational firms in which most or all of overseas profits would not be subject to U.S. corporate income tax.

That kind of shared pain, of course, is what gives Simpson-Bowles such potential as a “framework” or “template.” Everyone has some skin in the game.

Simpson-Bowles lets us “know what the options are,” says Boehner. “All we have to do is have real leadership and courage.”

And the truth is, there may be nothing better.

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