Simpson-Bowles Budget 2013: Barely Making a Dent in the Debt
Erskine Bowles and Alan Simpson wrote an editorial for the Washington Post on Monday, reminding readers that they have a plan to reduce the nation’s $17 trillion debt. Released on April 19, the latest edition of their proposal would reduce the nation’s deficit $2.5 trillion by 2023.
That means debt would end up constituting 69% of gross domestic product. That figure nearly aligns with President Obama’s own plan, which projects debt at 73% of GDP, and stands substantially higher than the 55% target passed by the House of Representatives in the Paul Ryan Budget. The Congressional Budget Office (CBO) projects debt will equal 77% of GDP in 2023 under current law. It's hard to see how Simpson-Bowles represents a serious attempt to cut the national debt.
It is noteworthy to keep in mind that none of the plans actually decrease the size of government. The most conservative budget, the Ryan plan, increases spending at a rate of 3.4% annually. Ryan’s plan has also become more liberal with each year: In 2011, it proposed spending increases of 2.8% annually, but in 2012 it proposed an increase of 3.1% each year.
In all, even Ryan’s budget would reduce the deficit by a mere 25 percent of the national debt, or $4.6 trillion, over 10 years. Obama’s budget would cut the deficit by an insignificant $1.8 trillion.
Considering how similar the Simpson-Bowles plan is to President Obama’s own plan, it is notable that the president refuses to offer it his endorsement. Congressional Republicans are not as hesitant, and Senator Lindsey Graham (R-S.C.) and a few other Republican senators have endorsed the Simpson-Bowles plan.
It goes to illustrate how much better Democrats are at marketing than Republican leaders in Congress. Instead of negotiating with Republicans, Democrats have a practice of setting multiple goalposts of their own, any of which they would accept. Instead of negotiating on their own terms, Republicans are usually happy to accept and start promoting at least one of the Democratic options.
That said, not all of the plan’s proposals are bad. It proposes some politically infeasible measures that would limit spending, such as capping it to half the projected inflation rate through 2020. President Obama wants to increase spending by double the rate of inflation through 2023 (By proposing something extreme he moves the ball to the left—a concept Republicans have yet to grasp).
The Simpson-Bowles plan would also eliminate business tax subsidies and reduce the corporate tax rate. Instead of taking money from companies that the governing political party dislikes and giving it to those that are more favored (like Solyndra), it would simply eliminate subsidies and reduce the tax burden.
Additionally, spending caps would be enforced by point of order and abatement—whereby the Office of Management and Budget (OMB) would engage in across-the-board spending cuts, and any measure to suspend the cuts would require a separate non-amendable vote in the House and an additional vote in the Senate requiring 60 votes in favor.
The only problem with that proposal, unfortunately, is that 60 votes may not be enough to keep future sessions of Congress on track to reduce the debt.
The Simpson-Bowles plan offers a starting point for creating a more fiscally solvent government. Some of its suggestions and enforcement measures are worthwhile components. But it isn’t particularly serious about reducing the debt. Congress should look to do better.