Feb. 20 (Bloomberg) -- For years, Erskine Bowles and Alan Simpson pulled off a very unusual and very difficult trick: They managed to position themselves firmly in the political center even as their budget proposal was far beyond the boundaries of what either party was proposing.
The Simpson-Bowles plan, released in December 2010, included more than $2.5 trillion in tax increases over a decade -- more than President Barack Obama has ever asked for. It eliminated the tax break on capital-gains income entirely. It raised the gas tax by 15 cents. It phased out the deductibility of employer-provided health insurance. It converted the mortgage-interest deduction and the charitable deduction into tax credits. It included deeper Defense Department cuts than called for under sequestration. It raised the Social Security retirement age as well as the payroll-tax cap.
(The other major bipartisan debt-commission proposal, from former White House budget director Alice Rivlin and former Republican Senator Pete Domenici, was, if anything, even more aggressive on taxes, proposing a value-added tax.)
Much of this, in my view, was to the plan’s credit. But it made it a bit surprising that so many resolutely anti-tax Republicans also liked the Simpson-Bowles plan, or at least professed to like the Simpson-Bowles plan.
Senator Johnny Isakson, a Georgia Republican, raised no eyebrows when he called the plan which, remember, included $2.5 trillion in new taxes, “a conscientious way to address the debt and deficit.” And it became rote for Republicans to criticize Obama for not doing more to support Simpson-Bowles. “In my view, the president should have grabbed it,” Mitt Romney said during the debates. “If you wanted to make some adjustments to it, take it, go to Congress, fight for it.”
Of course, that’s just what the president did. His 2012 budget differed from Simpson-Bowles mainly because it included fewer tax increases and defense cuts. That moved the budget debate to the right. Republicans, of course, brought out the Ryan budget, which pushed the debate even further to the right. So Simpson and Bowles were left in an uncomfortable position: They were supposed to represent the center, but they were actually, in terms of policy, relatively far to what had unexpectedly become the left.
Predictably, when it came down to it, the kind words from Republican politicians didn’t translate into “aye” votes. Very few Republicans -- or Democrats -- actually supported Simpson-Bowles. When a bill based on the plan came to a vote in the House, it failed, 382-38. Only 16 Republicans supported it. And that was a version built specifically to appeal to Republicans.
What saved the duo’s political potency is that few of their fans actually read the proposal. The Simpson-Bowles brand came to denote a nonpartisan, solutions-oriented approach to the federal budget -- the antithesis of the small ball and bickering that had quickly come to define Washington.
But that misunderstanding could only last so long. So Simpson and Bowles are back this week with a plan that tries to reposition their policy alongside their reputation: firmly in the center. And that makes it an interesting window into how perceptions of the center -- or what passes for it in Washington -- have shifted since December 2010.
The main difference between Simpson-Bowles 1.0 and Simpson-Bowles 2.0 is that the second iteration cuts the tax increase in half. If the original proposal were to pass today, it would raise taxes by more than $2.5 trillion. The new version would raise closer to $1.3 trillion.
Some of the difference is made up in cuts to health-care spending. The original proposal would save $480 billion from health-care programs. The new proposal would save $600 billion.
The bulk of the change, however, is simply that the new plan attempts less deficit reduction than its predecessor. Whereas Simpson-Bowles 1.0 would have cut the deficit over the next 10 years by more than $6 trillion, this plan cuts barely more than $5 trillion. I asked Bowles this week what was behind the changes. He gave me two answers. One was that Simpson-Bowles 1.0 was an attempt to get to the right answer while Simpson-Bowles 2.0 was an attempt to get to an answer. “We weren’t trying to put out the ideal plan,” he said. “We were trying to put out something that might be able to get done.”
The other was that he felt burned by the White House. “I think it is fair to say if you go back and look at what was said after we came out with the original Simpson-Bowles plan, the White House and the president hit us up pretty hard for two things,” he said. “They said we had too much revenue and too much defense cuts.” He added, “Being far out front of the president on revenues wasn’t something I wanted to do again.”
The president’s team would argue the opposite. Simpson and Bowles, they think, never really made the case for their revenues or defense cuts, and they instead hid behind a pox-on-both-their-houses political approach that let them preserve their popularity while enabling the Republicans’ ceaseless march to the right. Despite being far closer to the Simpson-Bowles plan than the Republicans, the White House never got cover from the two budget gurus, whom it suspected were more interested in husbanding their own popularity than in pressuring Republicans to cut a deal.
Behind this debate is a strange political reality. The original Simpson-Bowles plan was released after the Republicans won the 2010 midterm election. In the time between that plan and this plan, we’ve had many budget debates, a lot of deficit reduction tilted toward spending cuts, and an election in which Democrats scored an overwhelming victory -- in part by arguing for higher taxes. And yet the judgment of Simpson and Bowles, perhaps correctly, is that the center has moved far to the right on taxes.
In releasing this new plan, however, the two budgeteers radically change the nature of their project. Their original effort was an attempt to build a center around a proposal they thought was the right answer. The new effort is an attempt to pick a center between the two parties. The credibility that once came from being at least somewhat outside the political system has been traded for the possible influence that comes from working within it.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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