Scientists believe the world will end in 7.6 billion years, when the sun turns into a red giant and vaporizes the earth. On that day, few in Washington would be surprised if Alan Simpson and Erskine Bowles introduced their latest deficit-reduction plan. The former Wyoming senator and the former chief of staff to Bill Clinton are the world’s most famous and indefatigable budget scolds, as I noted in this recent Bloomberg Businessweek cover profile of the pair. This morning, at a Bloomberg Government event, they unveiled their latest proposal. Bloomberg’s ace tax reporter, Richard Rubin, broke the details last night.
Here are the top numbers: The new package would reduce the deficit by $2.5 trillion over 10 years. It would raise $740 billion in new revenue, mostly by reforming the tax code. It would cut future Social Security benefits through the same manner (“chained CPI”) proposed by President Obama. And it would raise the Medicare eligibility age and subject a broader swath of the population to means testing. Right now, debt as a share of gross domestic product is shrinking; the new Simpson-Bowles plan would shrink it a little faster.
The diligent reader of Bloomberg Businessweek might be thinking to himself: Wait just one minute—wasn’t that influential study advocating austerity just dismantled by a 28-year-old grad student? Why would we want to impose more of it now? Why, yes, it was. My colleague Peter Coy has the details here. And Kevin Roose of New York magazine has a great interview with the young economist responsible.
But this has not dissuaded Simpson or Bowles, the latter of whom said at this morning’s event, “What it doesn’t change is the common sense and my own personal experience in both the public and private sector that when any organization has too much debt, that that is an enormous risk factor.”
The message from this morning’s event was, “Full steam ahead.” (The hashtag was #SBPATHFWD.) Yet for all their high-profile lobbying, scolding, and importuning, Simpson and Bowles have had almost no effect at all in the place that matters most: Congress. “Simpson leaves rambling voice mail messages in my inbox,” Grover Norquist told me two months ago. “Nobody in Congress listens to him.”
Might that finally change? Could Simpson-Bowles 3.0 turn out to be, Goldilocks-style, just right for Congress to act on? The signs don’t augur well. After Republicans forced a return to “regular order” earlier this year to hash out deficit and spending concerns, and after both parties passed a budget, GOP leaders have suddenly gotten cold feet and don’t want to negotiate any further. Deficit hawks may be disappointed by this news, but they can take solace in the fact that nothing appears to deter Simpson and Bowles, and if this plan doesn’t do the trick, perhaps the next one will.