Was Simpson-Bowles really so great?
Bob Greenstein, president of the Center on Budget and Policy Priorities, is a calm, even-tempered guy. Imagine a budget appendix that gained the power of speech, and perhaps of bemusement, and you're pretty close. Monday was the first time I've ever heard him sound agitated. The culprit? Simpson-Bowles -- and, in particular, the way it's colored people's perceptions of the president's budget.
"I'm very frustrated by the debate in the media over this," he told me. "The whole discussion starts from the following assumption: The president had a fiscal commission, they stepped up to the plate, identified the big changes, and he walked away. The assumption was wrong. Simpson-Bowles was one big magic asterisk."
A "magic asterisk" is a term budget wonks use for a line in a budget that controls costs without identifying a plausible mechanism. In the most extreme case, imagine a budget that projected zero deficits between 2015 and 2025, and got there by simply saying, "The government will not run a deficit between 2015 and 2025." That's a magic asterisk. It says it will save money, but it doesn't say how.
And Greenstein is right: Simpson-Bowles was full of magic asterisks. It controlled discretionary spending by simply telling the government to "hold spending in 2012 equal to or lower than spending in 2011, and return spending to pre-crisis 2008 levels in real terms in 2013. Limit future spending growth to half the projected inflation rate through 2020." Sounds great in theory. Pretty tough in practice.
Tax reform? "The Commission recommends requiring the House Committee on Ways and Means and the Senate Committee on Finance, in cooperation with the Department of the Treasury, to report out comprehensive tax reform legislation through a fast track process by 2012."
Health-care costs? "Establish a global budget for total federal health care costs and limit the growth to GDP plus 1 percent." And if that doesn't work? "Require Congress and the President to consider further actions that make more substantial structural reforms."
I think magic asterisks have their place. At the time, I called it "the Simpson-Bowles plan for capping stuff," and wrote, "It's very hard to say exactly what policies we'll need to follow in the coming years. Some things will save less money than we hope, and others will save more. Some programs will become more necessary than we realize them to be now, and others will fade in importance as the circumstances that birthed them recede further from view. We don't need to make all those decisions now, and we shouldn't lock all those changes into place now." Sometimes, setting targets makes more sense than pretending we can set specific policies for the next 10 years -- and that's particularly true if the targets are paired with expedited policies for achieving them.
But Greenstein is right: There's an overly rosy recollection of Simpson-Bowles taking over the discussion. The Fiscal Commission didn't make the hard calls. They called for the hard calls to be made. And even at that level of vagueness, they weren't able to get key commission members, like Paul Ryan, chairman of the House Budget Committee and a necessary participant in any budget deal, to sign onto the plan.
That doesn't mean Obama shouldn't have gone further, of course. His vague call for tax reform and Simpson-Bowles's vague call for tax reform aren't that different, but his call for slight reductions in the Defense Department's rate of growth substantially undershoots Simpson-Bowles's call for a trillion or so in cuts to security-related discretionary spending. But a lot of the people saying he should go further are defining further by mentioning Simpson-Bowles -- even though Obama would be roundly criticized for budget gimmickry if he simply dropped those magic asterisks into his budget. In fact, I criticized them for using one of these to pay for their infrastructure spending.
And it only gets harder as the issues get bigger. Take health-care reform. Getting more specific than we've gotten over the past year is difficult. "We included most of the major recommendations we'd been getting from MedPac in the Affordable Care Act," says Greenstein. "We need to figure out the next round of things to do, and we have many demonstrations, pilots, and projects to try to figure that out. But Simpson and Bowles didn’t know what to do next, either. They just printed that policymakers should figure out how to do something."
In defense of Simpson-Bowles, the report did include a couple of ideas, though they were few, and the recommended items wouldn't have delivered on the promised savings. But it's a bit circular for lawmakers to just gesture at Simpson-Bowles, given that Simpson-Bowles was largely just gesturing at lawmakers. If people want to go further, they should say what further means. And it should include more than a magic asterisk.
Photo credit: Mark Wilson/Getty Images.
| February 16, 2011; 9:12 AM ET
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