Why We Reject The Simpson-Bowles Deficit Reduction Plan
There are a lot of myths about “Simpson-Bowles,” the plan being circulated by former Republican senator Alan Simpson and former Clinton administration official Erskine Bowles that is being touted as a balanced, reasonable way to reduce the federal deficit. In reality, it is neither balanced nor reasonable. Here is what you should know about the Simpson-Bowles plan.
Alan Simpson is a conservative who has argued for cutting Social Security benefits for decades, deriding it as a “Ponzi scheme” and “a milk cow with 310 million tits.” Erskine Bowles, who made a fortune as a Wall Street investment banker, praised the House Republican budget of Rep. Paul Ryan, which would have turned Medicare into a private insurance voucher, slashed Medicaid and locked in deep tax cuts to the top 2 percent, as “sensible.”
While Simpson and Bowles were named to lead President Barack Obama's National Commission on Fiscal Responsibility and Reform, but they were unable to get the bipartisan commission to agree to their recommendations. So the Simpson-Bowles plan everyone is talking about is just that: the personal opinions of two men.
The plan is not the balanced or “centrist” plan its supporters claim. The plan urges $2 in spending cuts for every $1 in additional revenue. In other words, while the vulnerable are being asked to bear real pain as the economic supports they depend on weaken, little is being asked of the wealthiest Americans, who today are not doing their fair share to rebuild the economy.
Here are the real details:
The Simpson-Bowles plan calls for $2.9 trillion dollars in spending cuts. The majority of these cuts will be made to Social Security, Medicare and Medicaid. Such cuts will destroy the social supports that protect the middle class.
While the the Simpson-Bowles plan would cut benefits to elderly, college students and veterans, it would extend the Bush tax cuts for the richest 2 percent of Americans. This continues to make the middle class pay for benefits for the ultra-rich.
Simpson-Bowles would slash Social Security benefits, which will hurt seniors and middle-class Americans who rely on Social Security for a stable retirement. One way it would cut benefits is by raising the retirement age by four years, to 69, requiring Americans to work longer. This is justified as being consistent in an increase in life expectancy, but that fails to recognize that this so-called increase in life expectancy has been felt, primarily, by the super-rich.
Unemployment was around 9 percent when Simpson and Bowles made their plan public, and will exceed 6 percent for years into the future. And yet their plan would slash federal spending on infrastructure and investments in jobs. The perversity of this is that job creation is the most important thing we can do to raise revenue to reduce the deficit, and put Social Security and Medicare on a more firm financial footing.
The Simpson-Bowles plan would cap revenues flowing into the federal treasury at 21 percent of gross domestic product, which would take government service levels back to the late 1950s. That was before there were Medicare and Medicaid, and the range of other government services that keep us safe and support broad prosperity. The need for those services won’t go away; instead already strained state and local governments would instead be pressured to step into the void, often less efficiently and equitably.
The Simpson-Bowles plan promises to make up for lower tax rates for the wealthiest Americans by closing closing tax loopholes and ending tax credits. But there is no way closing tax loopholes and ending tax credits can make up for what the public loses by making the 2001 and 2003 Bush administration tax cuts for the wealthiest Americans permanent. And the tax breaks and credits that Simpson and Bowles would protect benefit pharmaceutical and technology companies more than middle-class Americans. This rewards companies that already contribute to America’s rising health care costs.
Meanwhile, the Social Security cuts called for in the Simpson-Bowles plan would target the benefits of the lowest 60 percent of workers.
While the Simpson Bowles plan is heavy on cuts to Social Security, Medicare and Medicaid, it would only make defense spending cuts of $100 billion dollars over 10 years. The defense budget in one year, 2010, was $693 billion. Clearly, $100 billion is a drop in the bucket. A commission of defense experts that spans the ideological spectrum has come up with a plan to cut close to $1 trillion in defense spending over 10 years, and even with those cuts America’s military will remain by far the strongest and most well-funded in the world.
The Simpson-Bowles plan is being heavily backed by deficit-hawk Peter G. Peterson and a number of his foundations. His multimillion-dollar campaign includes advertising; media appearances by a corps of spokespeople; various websites, and The Fiscal Times “news” service, which seeks to insert his views into mainstream media news columns. Simpson-Bowles and the Peterson campaign mutually reinforce an ideology and set of policies that benefit the ultra-rich and corporations, not middle-class Americans.
Read related blogs on OurFuture.org:
- The "BS" Austerity Plan Nobody Wants ... And We May Get Anyway
- Six Degrees of Social Security: The President, The Senator, and the Billionaire
- The Bowles-Simpson Medicine Show Is Back in Town
- Attention Democrats: Don't Be Fooled, Bowles-Simpson Plan Is Ryan Budget-Lite
- Simpson & Bowles Show Deficit Commission Is Cover For An Agenda
- Progressive Breakfast: 10 Reasons (And Then Some) To Oppose Simpson-Bowles
- Simpson/Bowles: A Predawn Raid on the Middle Class
- Bowles-Simpson Commission: Is The Deck Stacked Against Social Security?