Is the Simpson-Bowles deficit reduction plan just a bunch of … baloney?

Ethan: This past Sunday I attended former Gov. Angus King’s campaign event with Erskine Bowles, the co-chairman of President Barack Obama’s deficit commission. Without going into the pros and cons of the event in regard to King’s campaign (except to say I still know very little about what King would do to deal with our long-term financial issues), I thought this might be a good opportunity for us to debate the pros and cons of the plan, which Bowles submitted with his fellow co-chairman, former Republican Sen. Alan Simpson.

Phil: You mean I don’t get to ask why the “independent” brought a Democrat to discuss our deficit and had no Republican on the stage?

Erskine Bowles, co-chairman of the bipartisan National Commission on Fiscal Responsibility and Reform talks with independent U.S. Senate candidate and former Maine Gov. Angus King on Sunday. BDN photo by Seth Koenig

Ethan: No! Although that’s a pretty good question. Today’s column is meant for policy, not politics.

Phil: Since your guy Obama created the commission, why don’t you start by explaining why he didn’t make their recommendations part of the budget he submitted to Congress?

Ethan: He didn’t make it part of his budget because Bowles was unable to garner the 14 votes needed to make that happen (something Bowles failed to mention on Sunday). But more importantly, your vice presidential nominee Rep. Paul Ryan got his fellow House Republicans to fall in line and vote against the recommendations. That made it pretty clear to Obama that if he put it forward, it would be dead on arrival. And, in fact, when Congress did vote on it, it only got 38 votes!

Phil: Wow, I didn’t realize a lowly member of Congress was so powerful he could take down a president’s commission. And I might remind you that the Obama budget received zero — that’s right, zero — votes in the U.S. Senate, which tells us where the real problem is. Politicians are more interested in their next election than they are in the next generation.

Ethan: There are many parts of the plan that I like, such as tax reform that wipes out loopholes, making the wealthy pay a fairer share, much needed cuts to wasteful military spending, fully funding roads and bridges through a new carbon tax and letting low-income seniors receive enhanced Social Security benefits. There are also parts that I don’t like, such as forcing the elderly to work longer, artificial caps in spending and arbitrary reductions in public sector employment. However, on balance, this was a legitimate compromise. Had I been on the commission, I expect I would have voted for the framework. How about you? Yes or no on Simpson-Bowles and why?

Phil: Yes — even though it would reorganize how taxes are collected. America would have seen bipartisan results that acknowledged the problem and delivered reductions in our deficit. I believe even the most strident Tea Party member would swallow tax revenue adjustments if it truly went to debt reduction, combined with congressional behavior that brought spending down. And I believe that a congressional track record of sticking to these principles would spur a rejuvenated private sector.

Ethan: I think what I like best about the plan, having served on the Maine State Taxation Committee for six years, is all the corporate welfare it proposed to eliminate. All our special-interest loopholes simply allow the wealthy with lawyers to get wealthier, while the rest of us end up paying more than our fair share to make up the difference. Obviously, it left a lot of the final details to Congress, and for me to support the final package I would have needed to see if it was more or less progressive.

Phil: Here is the cruel reality. The plan, even if fully implemented and adhered to, is just a beginning. The grizzly bear in Washington is famished for revenue from everywhere. Bowles was only a sorbet compared to what lies ahead. Neither the president nor Congress could bring themselves to vote for the Simpson-Bowles plan, which was honestly the easy part! A more serious crisis awaits in January if Congress and the president don’t deliver the courage to solve this mess they created.

Ethan: Grizzly bears and sorbet? You must still be on vacation in Manitoba. I’m not sure you are correct. Certainly much work must always be done, and diligence must be paid to long-term solutions, but Bowles proposed to cut $4 trillion from our deficit in the next 10 years and set Social Security on a solvency path for the next 75 years. The plan reduces our debt-to-GDP ratio to 60 percent by 2023 and 40 percent by 2035, while completely zeroing out the deficit. Indeed, it gets us back to where we were before your boy, former President George W. Bush, started blowing all the Bill Clinton surpluses. But I digress.

Phil: Although you alluded earlier to not liking the caps and the “artificial” cost controls included in the plan, let me just say these are the pieces I think are most important. Obviously one Congress cannot bind another, but the controls Bowles proposed (fast track authority, triggers, changes in the Consumer Price Index and automatic budget revisions) were as good as anything I have seen, other than a Constitutional amendment. Yes, a future Congress could change the law, but both houses of Congress would have to agree, and the president would have to sign. Plus, this would all have to happen in public for the voters to see.

Ethan: I have never been a fan of artificial caps and cost controls, as I believe democracy should be the final cap and control. If the public doesn’t like how much you spent, then they can kick you out.

Phil: Unfortunately, I suspect that is why the Simpson-Bowles plan didn’t go anywhere. Too many politicians were worried that people would kick them out of office for being courageous. My belief is that they would have been rewarded.