Automatic federal spending cuts across the board, known as sequester, that will cut spending by $85 billion are only 10 days away and there are no indications that the U.S. Congress is going to be able to come to a deal before the deadline arrives. It is with that as a backdrop that Alan Simpson and Erskine Bowles, the co-chairs of Obama’s Deficit Reduction Commission known as Simpson-Bowles, has come forward this morning with a revised plan that would slow the nation’s debt growth. The plan being put forward now by Simpson and Bowles is more of a piecemeal approach.
The commission believes that the 2011 budget talks and the recent tax hike that resulted from the “fiscal cliff” deal are steps one and two, but that additional steps are needed that would include slowing the growth of Medicare and Medicaid payments to providers, enacting Social Security reforms, and reforming the tax code. Similar recommendations were in the original plan presented by the commission.
“There is no perfect solution to our fiscal problems. 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."
Up to this point, both parties have avoided proposing politically risky reform specifics hoping to force the other side into action-thus avoiding having to shoulder any of the blame in the 2014 election cycle. President Barack Obama continues to ignore the reality that entitlements must be addressed to bring the deficit under control, instead targeting revenue hikes with what little reduction in spending there is coming from discretionary spending (which accounts for less than a third of national spending).
The White House has made it clear they will not consider any changes to either Medicare or Social Security, yet no serious reduction in the debt or out of control deficit spending can take place without entitlement reform and additional targeted cuts.
Simpson and Bowles released a three-page outline that goes into more detail. The plan calls for cuts of $600 billion from Medicare and Medicaid (the White House will support only $400 billion), $600 billion in new tax revenue from ending or sharply reducing deductions and breaks (the House GOP has said all revenue is off the table) and $1.2 trillion in cuts to discretionary spending, along with cuts in cost-of-living increases for Social Security, the farm program and civilian and defense retirement programs.
Simpson also said Tuesday that without entitlement reform President Obama “will have a failed presidency.”
With Congress wasting another week because they are not in session, should we believe that either party is going to put forth an honest effort to reduce what has become annual trillion dollar deficits? The 2012 deficit was $1.1 trillion, the fourth consecutive year of trillion dollar deficits following $1.3 T for 2011, $1.29 T for 2010, and $1.4 T for 2009.
Former Wyoming Republican Senator Alan Simpson and Erskine Bowles, a Democrat who served as President Clinton’s chief of staff, have earned reputations as centrists that are only concerned with deficit reduction, not party politics. While politicians from both sides appear to lack the courage required to take control of our nation’s fiscal direction the road map has been laid before them but, sadly, without courage to do what is required our nation will continue down the road toward a fiscal calamity that will be worse than what the Great Recession brought.