Bowles and Simpson Release New Deficit Reduction Framework
Today, Erskine Bowles and Alan Simpson released a proposed framework and principles for comprehensive deficit reduction. The plan builds on the progress made by President Obama and Speaker Boehner in December as a starting point for a principled compromise with enough savings to put the debt on a sustainable downward trajectory.
The proposal calls for achieving an additional $2.4 trillion of deficit reduction over the next ten years. Roughly one quarter of those savings would come from health care reforms and another quarter from tax reform. The remaining savings should come from a combination of mandatory spending cuts, stronger discretionary caps, cross-cutting changes such as adopting the chained CPI for inflation-indexed provisions in the budget, and lower interest payments. The proposal also calls for a parallel process to make Social Security sustainably solvent and further actions to bring transportation spending and revenues in line and limit per capita cost growth in federal budgetary commitment to health care to about the growth rate of the economy.