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Revisiting Simpson-Bowles: Reducing the debt must remain Congress’ goal

REUTERS/Jonathan Ernst
Democrat Erskine Bowles, former Clinton White House chief-of-staff, left, and former Wyoming U.S. Sen. Alan Simpson, a Republican, became well known after heading an Obama-appointed National Commission on Fiscal Responsibility and Reform, which issued a detailed report in 2010.

The U.S. Senate and House last week wisely passed a bipartisan agreement to reopen the federal government through Jan. 15, 2014. In addition, the debt ceiling was lifted until three weeks later (Feb. 7), thus averting a likely fiscal disaster and setting the stage for more negotiations between Congress and President Barack Obama. Nine Minnesota members of Congress agreed to this tentative solution; Rep. Michele Bachmann voted against the deal.

slocum
Chuck Slocum

Much work remains to be done in both chambers, as House and Senate leadership has already named a bipartisan group of conferees to a new budget conference committee. The group is charged with producing a plan of action in less than two months (Dec. 13). Meanwhile, former Wyoming U.S. Sen. Alan Simpson, a Republican, and his partner, Democrat Erskine Bowles, former Clinton White House chief-of-staff, continue their crusade to persuade politicians in the Capitol to figure out a way to decrease federal spending and pay the nation’s bills.

Work on long-term debt

Their message is simple: Washington needs to stop squabbling over short-term spending bills and shrink its $17 trillion debt now. So-called “sequestration,” the fiscal cliff and the current congressional deliberations do not seriously address debt reduction.

Simpson and Bowles became well known after heading an Obama-appointed National Commission on Fiscal Responsibility and Reform, which issued a detailed report in 2010. Its original recommendations, presented as a template for a place to start, would have reduced the nation’s debt and deficit while reining in government spending on all of the nation’s programs through both spending reductions and tax hikes.  

Unlike sequestration and the debate over the short-term spending bill now under way, the Simpson-Bowles plan also aimed to curb spending increases in Social Security, Medicare and Medicaid. Those three mandatory entitlement programs — highly popular with many groups — represent two-thirds of our federal government’s spending.

Plan ignored for three years

With major political hurdles, the duo’s plan has been ignored by the president and both parties in Washington for over three years. The now $17 trillion federal debt has continued to grow, although its size relative to that of the economy is beginning to decline. A nonpartisan group calling itself “The Campaign to Fix the Debt” was founded in 2010 to support Simpson and Bowles.

Last week,  prior to congressional action, in a push-back at Simpson and Bowles, former Obama economic advisor and Clinton Treasury Secretary Lawrence Summers said the shutdown threat and the debt-ceiling crises were more pressing than worrying about the overall nation’s debt and deficit.

America, especially our youngest citizens who represent our future work force, deserves no less than a full-scale effort on the part of Obama and Congress to plan for deficit and debt reduction. The responsibilities of elected public servants would be well served by such courageous, bipartisan leadership.

Kicking the can down the road

While the recent deal delivers the nation from the two fiscal crises for the time being, it only kicks the can down the road once again and really does nothing to address the nation’s long-term budget challenges.

Clearly, the lack of a long-term budget deal has propelled the nation from economic crisis to crisis for most of the past decade. The president and Congress ought to begin now to solve the overall deficit which represents “the elephant in the middle of the table.”  

The real work will occur in the next few weeks, to be sure, to accomplish something under the new deadlines, and, we can hope, to achieve over time a more comprehensive fiscal framework — one that begins to actually reduce the deficit,  so that the nation does not face further fiscal speed bumps.

Chuck Slocum, president of The Williston Group, a management consulting firm, is among 360,718 Americans who have signed the “Citizen’s Petition to Fix the Debt.” 

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Comments (18)

  1. Submitted by Jon Kingstad on 10/23/2013 - 08:39 am.

    “Deficits don’t matter. . . “

    According to Dick Cheney who was at the moment, was taking the country down the road into a completely wasteful war built upon lies. And after the 2001 “Bush tax cuts” for the 1% who were going to be freed of the taxes to regenerate the economy. Well, that ended well too, didn’t it? We are now in the fifth year of the Bush recession. Out of ideas, the right brings out Simpson-Bowles to change the subject to now intone how grave the deficit created by the past ten (or maybe thirty going back to Reagan) years of failed economic policies. To what? “Reform Social Security and Medicare.” That is to say, cut benefits?

    This is from the same crowd of bankers and their consultants who gave us the past thirty years of failed policy? The ones who have raked in generous profits from the looted pensions of bankrupt companies, wholesale mortgage foreclosures and government bailouts?

    I think not. Time I say for some real deficit spending to create expand Medicare, increase Social Security benefits and increase spending on investments- green investments-to create new jobs that the bankers and their consultants who have brought us their failed policies have done such a great job in destroying.

  2. Submitted by Tom Lynch on 10/23/2013 - 08:58 am.

    The debt and deficit

    are hardly this country’s main problems. Only to Wall Streeet, the financial industry, Republicans(the same ones that ran up 80% of our current debt), some ‘business friendly’ Democrats, and the corporate media.

    In the real world, it’s JOBS JOBS JOBS. Not just any jobs, but decent paying jobs. One thing Mr. Slocum doesn’t have to worry about. With over 7% unemployment, the debt and deficit are NOT are primary problem.

    The deficit has fallen faster under the current POTUS than any time since Eisenhower. Not a good thing when federal employees are being laid off by the hundreds of thousands. Which in turn affects the private sector.

  3. Submitted by Dennis Tester on 10/23/2013 - 09:25 am.

    “Courageous” leadership?

    It’s not courageous to stop spending money you don’t have. It’s not courageous to work to lighten the burden of future generations. It’s the right thing to do.

    It’s courageous to continue to spend without regard to its consequences as it’s courageous to drive your car towards the edge of the cliff. Except that the people in the backseat are your kids and grandkids.

  4. Submitted by Hiram Foster on 10/23/2013 - 09:41 am.

    Well, not really

    It’s much more important to get the economy going again than to deal with the debt issue now.

  5. Submitted by Neal Rovick on 10/23/2013 - 09:50 am.

    A deficit is created by too much spending and/or too little revenue.

    What has driven the increase in spending? Economic collapse, unfunded wars, health care spending.

    What has driven the decrease in revenues? Tax cuts, economic collapse.

    The deficit this year promises to be below the levels in the Bush 2 administration. By the way, that was the administration that cut tax revenue to eliminate the “danger” of paying off ALL federal debt by 2011.

    You have 2 parties out there, the “R” version wants to cut revenue with more tax cuts, and do away with the the heath-care reform that is only the first baby-steps to reduce the long term rise in health care expenses. Both of their actions are absolutely the wrong way to go. Their politics of obstruction the past few years have had the very real effect of hobbling the recovery decreasing growth and employment. Throw in another war in the mideast and we’re really in the toilet.

    The reality is that the party of “fiscal responsibility” is not.

  6. Submitted by Adam Miller on 10/23/2013 - 10:21 am.

    Right

    Growth is the only way the debt will ever be “fixed” (which is largely a meaningless priority anyway).

  7. Submitted by Hiram Foster on 10/23/2013 - 10:32 am.

    A deficit is created by too much spending and/or too little revenue.

    That of course incorporates a value judgment into the discussion. A deficit is created when more money is spent than received. Whether too much money is involved or not enough is a policy consideration. Furthermore, when talking about something as large and as complicated as the national economy, what constitutes spending and what constitutes revenue also reflects underlying policy judgments.

  8. Submitted by Eric Paul Jacobsen on 10/23/2013 - 03:03 pm.

    Mind the GDP, and don’t forget history.

    The debt is a big, scary number… On the other hand, our gross domestic product (GDP) is another big number that we should be concerned about, and during a recession, this number drops.

    But there’s no need to fight over which big number is more important. Instead, let’s look at the ratio of debt divided by GDP. Wikipedia does this in a very helpful article that discusses the recent history of our national debt as a percentage of GDP. Look it up here:

    http://en.wikipedia.org/wiki/History_of_the_United_States_public_debt

    According to Wikipedia, our debt-to-GDP ratio peaked at the end of the Second World War. Then it diminished, slowly but surely, over the late 1940s, 1950s, 1960s, and 1970s. And why was that? Was that the age of austerity? No, that was the age of Keynesian spending and progressive taxation! That is how the peak debt of 1945 was brought down to historic lows during the 1970s.

    With Ronald Reagan and the flattening of our tax system, the debt began to climb again, but it recovered whenever we as a democracy had the collective guts to tax the rich, for example under Bill Clinton in 1993. Reining in spending never had much to do with it.

  9. Submitted by Greg Kapphahn on 10/23/2013 - 11:08 am.

    When “Simpson/Bowles” Arrived

    President Obama did with it EXACTLY the appropriate thing:

    He tucked it into a file cabinet where it could be appropriately allowed to crumble to dust over the next many decades.

    Meanwhile, our “conservative” friends such as Mr. Slocum insist in seeking to solve problems we don’t even have,…

    (“problems” which they, themselves, created but refused to SEE as problems when they were in charge),…

    using approaches and methods that are so blind and wrong-headed that they will do nothing but make worse the problems we actually DO have.

    The best approach when it comes to those who signed the “Citizens Petition to Fix the Debt” is to take careful note of what they’re recommending,…

    then do PRECISELY the opposite.

  10. Submitted by Kurt Anderson on 10/23/2013 - 11:45 am.

    Help me with the math, please?

    The Fed buys $85B per month in treasuries. That adds up to $1.02T per year. The annual deficit is $670B (a healthy 37% reduction from 2012 as the economy slowly improves). So, that much of the Fed QE purchases go to fund the current deficit. Can I correctly conclude that the remaining $350B is retiring privately held treasuries, or paying the interest thereon? Since we all own the Fed, the old cliche that “We owe it to ourselves” is coming back into play. A substantial fringe benefit of this combined fiscal and monetary policy is that the dollar is realigning itself with (former) 3rd-world currencies so we are no longer bleeding jobs to the rest of the world, but instead we are recovering manufacturing and other blue collar jobs. It seems to me there is some pretty good method in this apparent madness.

  11. Submitted by Dan Hintz on 10/23/2013 - 11:58 am.

    Clinton

    Anyone who is even remotely serious about addressing deficits and debt would look to the last time this country had balanced budgets in the later years of the Clinton presidency. This happened because of a strong economy, higher taxes on the wealthy, and the absence of expensive foreign wars. Because Slocum and his ilk are driven by ideology and not an interest in actual solutions, we get the seed-corn-eating cuts-only approach instead.

  12. Submitted by Tom Christensen on 10/23/2013 - 03:46 pm.

    Proof the Republicans don’t know what they are doing

    George W. Bush, back by the GOP.
    Two unpaid for wars!
    Unpaid for Bush Tax Cuts for the wealthy!
    Unpaid for Medicare Part D!
    Financial collapse!

    Tim Pawlenty, backed by the GOP.
    He left Minnesota with a $6,000,000,000 debt.

    No need to listen to the Republicans!

  13. Submitted by Frank Phelan on 10/23/2013 - 05:16 pm.

    Not Simpson -Bowles

    There was no report by the SImpson-Bowles Commission. They couldn’t reach an agreement. So the two co-chairs took their show on the road. But it’s their show, not the Commission’s show.

    I’ll pay attention to them when they suggest cutting a healthy 25% fro the military budget. (And it is a military budget, it has little to do with defense.)

  14. Submitted by Jeffrey Peterson on 10/25/2013 - 08:33 am.

    Leadership

    While the scope of the $17 trillion plus deficit is bad enough, the total of long term unfunded mandates- including social security and medicare obligations- exceeds $70 trillion, and growing. Serious budget negotiations require leadership and typically that should come from the executive branch. There is little evidence this President has the inclination or the skills to commit to serious negotiations in what is an inherently frustrating process. But that is what leadership is all about.

    • Submitted by Karen Sandness on 10/29/2013 - 11:23 am.

      Social Security and Medicare both have fixes that

      Very Serious People don’t like to mention.

      Eliminating the cap on FICA contributions (currently about $110,000) would solve Social Securities problems in perpetuity, even if we sweeten the deal by giving high-income people a slightly higher payout upon retirement.

      Medicare needs to be opened to the entire population for two reasons. One is that it will be give the private insurance companies some much-needed competition. The other is that adding younger, healthier people to the pool will increase income in the form of premiums but reduce the percentage of pool participants who need expensive treatments.

  15. Submitted by Todd Hintz on 10/25/2013 - 08:50 am.

    Debt

    I would just like to add my voice to reinforce the excellent posts above. Address the economy (jobs jobs jobs!) and the debt problem goes away. People who aren’t working or are working minimal wage jobs cannot afford to buy anything and cannot afford taxes. Businesses don’t pay taxes if they’re not selling goods and service. Put people back to work and suddenly you have more tax revenue.

    Problem solved.

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