Former Clinton White House Chief of Staff Erskine Bowles and former Wyoming Republican Sen. Alan Simpson caused quite a stir last week by releasing their draft report as co-chairmen for the National Commission on Fiscal Responsibility and Reform. A New York Times headline captured the essence of the Bowles-Simpson recommendations: “Debt commission seeks Social Security cuts and tax increases.” Those are both third-rail issues, and consequently it’s tempting to dismiss the report as political showboating. But looked at in its entirety, the Bowles-Simpson draft provides a useful starting point for a desperately needed national discussion of what to do about the federal government’s exploding spending and debt. As with any discussion about budgets, the primary focus here must be on what are the most important federal priorities, and how they should be funded.
There is a public consensus that the federal government spends way too much on far too many programs, many of which are either unneeded, duplicative or wasteful, or better left to state and local authorities. Recognizing this reality, Bowles and Simpson recommend a host of reasonable cuts, starting with doing away with all congressional earmarks, for a savings of $16 billion. In a $3.5 trillion annual budget, $16 billion is a trifle, but that’s not why earmarks should end. Bowles and Simpson recognize that if Congress is unwilling to stop spending a million here for a bike path and a million there for community center swimming pool, it won’t be able to make the far tougher decisions that must be made on the federal budget.
Consider, for example, the commission chairmen’s recommendation that the federal work force be cut by 10 percent and that the number of federal contract jobs be trimmed by 250,000. These are two of 54 recommendations that together would cut $200 billion from the federal budget, with equal amounts from defense and nondefense accounts. Many of these items have been suggested by Democrats and Republicans, but were never adopted because of self-serving opposition by special interests.
Then there are the big-ticket items on the Bowles-Simpson list, including raising the retirement age from 67 to 69, reducing future Social Security benefits, hiking the federal gas tax 15 cents per gallon, and eliminating a host of popular tax deductions, including, most significantly, the mortgage interest deduction. To ease the pain, Bowles and Simpson would introduce a simplified system of tax rate brackets that are less onerous than the ones in place now. Liberals immediately rejected the entitlement cuts as unnecessary if only President Obama and Congress would increase taxes. For their part, conservatives attacked the tax hikes and deduction eliminations as simply giving Washington politicians more tax dollars to spend. The Examiner also has reservations about specific recommendations from Bowles and Simpson, but they deserve credit for putting substance on the table. So let the debate begin now in earnest.
