Saturday, December 8, 2012

Explaining the Bowles-Simpson Plan

For those of you fiscal cliff watchers who have been wondering whether the country ought simply to enact the "Bowles-Simpson" deficit reduction plan -- and I count myself among you -- here is a detailed summary of the plan with tables that compare its "savings" with the "savings" in other proposals. (We put scare quotes around "savings" because, of course, the word is inherently offensive in this context if one does not believe that all one's money belongs to the government in the first instance.)

One of the lesser-known features of Bowles-Simpson is that it assumed in its baseline that the "Bush tax cuts" would expire for the top 2%, presumably because at the time, in late 2010, President Obama had vowed precisely that. It seems to me that enactment of Bowles-Simpson-like cuts is the the only circumstance under which Republicans ought to countenance such a huge tax increase on the 2%. Since the GOP seems to be losing the public relations campaign around that question -- no real surprise there -- perhaps the House ought simply to enact all the Bowles-Simpson proposals (including the tweaks to Social Security) and then go home for Christmas. Then, even the non-Fox media would have a hard time blaming them for failing to compromise. It might change the terms of the debate to focus on spending and particularly entitlements, which is the real problem.

The policy problem might be that the cuts in entitlements are not deep enough to solve the problem forever. The political problem is that the Republicans understandably fear that the Democrats will demagogue them for having "gutted Social Security" or some such twaddle. I respectfully submit that we are neither going to make deep cuts in entitlements with the current political mix in Washington nor are the Republicans going to avoid demagoguery. Unless, that is, they do something that the media will concede is courageous and -- perhaps more importantly -- surprising.

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