The Simpson-Bowles Deficit Reduction Plan

Last Updated Nov 12, 2010 4:01 PM EST

With regard to the Simpson-Bowles deficit plan, my reaction is negative. There are bits and pieces of the plan that are good ideas, but in its totality it does not add up, and some of pieces of the proposal are puzzling. Why, for example, are tax cuts included in a proposal to reduce the national debt? That makes no sense at all except as an attempt to impose a particular ideology on the tax code. I have a similar response to revenue caps. Why are revenue caps part of the proposal? Wouldn't revenues higher than the cap close the deficit sooner? Isn't that what the commission is supposed to figure out how to do?

I assume the answer to the question about caps would be that this is an attempt to prevent spending growth. Unfortunately, there's no evidence that such attempts to "starve the beast" do anything to restrain revenue growth. Instead, the caps limit the options to pay for spending and make the budget problems worse. If Simpson and Bowles want to restrain spending growth, then they should be explicit about how that will be done instead of pretending to solve the problem with revenue caps.

At some point we will have to come to terms with the fact that the major problem is the growth in health care costs, and until that problem is fixed, the national debt problem will persist. This proposal does not address the problem that lies before us in a serious way, instead we get another proposed cap. The cap itself would "contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize." But that simply punts on the problem. What are the additional steps we will take "if needed," and what will the process be to determine to determine how those savings will come about? Are Simpson and Bowles suggesting we set up "death panels" to decide who will be covered for what? If not, what exactly do they have in mind?

If we are going to address the national debt problem, we are going to have to tackle health care costs in a serious way. This proposal does nothing of the sort.



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