The new deficit reduction plan from Alan Simpson and Erskine Bowles is disappointing for this simple reason. Whereas the first plan made a loud case that deficit reduction should begin with stimulus followed by a roughly equal mix of higher taxes and lower spending, the new plan is mute on stimulus, calls for 44 percent less revenue, and includes more cuts to health care and other mandatory spending programs, all the while capping discretionary spending at historic lows.
And yet. If I can beat up Simpson and Bowles for slashing their initial tax plan by 44 percent, I should also acknowledge the flip-side: They've asked Congress for more tax revenue than practically anybody else, including the president and most bipartisan groups, and that still counts for something, since taxes will eventually have to rise on more than the very, very, very richest Americans.
The first deficit reduction plan from S&B called for $2.5 trillion in higher taxes over ten years. That's $500 billion more than the Gang of Six recommendation, twice as much as the president asked for in the debt negotiations, and three times as much as John Boehner proposed in December. There's just no way to get to $2.5 trillion in new revenue without scheduling tax increases beyond the top 2 percent. Eventually, we'll probably have to do that. But Obama won't endorse that law for fear of legislative backlash, and Republicans won't sign it for fear of getting wiped out of the primaries. But S&B aren't trying to pass immigration reform. They're not elected. They don't face primaries. The only thing stopping Simpson and Bowles from reiterating that deficit reduction should be balanced are Alan Simpson and Erskine Bowles.
In his interview with Ezra Klein, Erskine Bowles suggested that the plan was designed to carve out a middle-ground between Republicans and Democrats. You can see what he means from the graph above, and it sounds reasonable.
It's actually really disappointing.The best thing to say about the first Bowles-Simpson plan was that it tried to draw a new baseline, not add the Democrat and Republican plans together and divide by two to find the arithmetic mean. Anybody with a calculator and a passing familiarity with the budget can answer the question: How do you cut $5 to $6 trillion with less than $1.5 trillion in new revenues? But that's not the right question. The right question is How do we insure against the risk of a deficit crisis later this decade while prioritizing our weak economy and workers, whose recovery is the most important step to repairing our budget? ... and I'm afraid this isn't the right answer.