The best critique of Bowles-Simpson
What bothers me most about the way Alan Simpson and Erskine Bowles are trying to sell their deficit reduction plan is their implication that they have come up with a singularly fair and reasonable way to stave off a fiscal disaster they describe in the starkest terms. There's a moralism in their rhetoric implying that if you don't sign on with their way of doing things, you are sending the country off into never-never land. In fact, there are many different paths to fiscal responsibility, including far more progressive approaches -- see, for example, the report prepared jointly by the Economic Policy Institute, Demos and the Century Foundation. Deficit reduction is about tradeoffs, and, on the whole, Bowles and Simpson have made a rather conservative set of choices.
This is not to say that their plan is devoid of good ideas. I salute them in my column for suggesting that capital gains should be taxed in the same way as ordinary income. Getting that idea back into general circulation would be a significant contribution. But their plan is still far too dependent on spending cuts relative to revenue increases to merit support from progressives.
The best critique of the Bowles-Simpson plan I have run across so far was offered by Robert Greenstein and James Horney of the Center on Budget and Policy Priorities, a liberal group that sometimes gets grief from fellow liberals for how serious it is about cutting the deficit. Here's the core of their criticism:
The Center's statement credits Bowles and Simpson for having "performed a valuable service in educating policymakers and the public about the need for tough medicine to tackle this problem, and for putting specific proposals on the table rather than empty rhetoric." But Greenstein and Horney conclude: "Unfortunately, their product remains seriously flawed." They are right on both counts.
The new proposal remains heavily skewed toward deep program cuts. Such cuts account for 77.5 percent of the proposed policy savings in 2012 through 2015, with revenue increases accounting for less than a quarter of the savings. Budget cuts account for 69 percent of the savings through 2020. A more balanced approach would come closer to an even split.
Because program cuts shoulder such a large share of the burden, the plan contains overly deep and problematic budget cuts (as well as meritorious ones). A 50-50 split between cuts in programs and increases in revenues could have addressed these problems.
The plan also relies on reductions in scheduled Social Security benefits for most of the changes it proposes to ensure the program's long-term solvency. Those benefit cuts outweigh the proposed revenue increases by 2 to 1 over 75 years -- and by 4 to 1 in the 75th year. This does not represent a balanced approach to Social Security reform.
| December 2, 2010; 9:50 AM ET
Categories: Dionne | Tags: E.J. Dionne
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