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CQ: Simpson-Bowles Release New Debt Plan Into Changed Budget Environment

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Simpson-Bowles remains a potent brand to some in Washington, and the two argue their plan provides the building blocks for a “principled compromise.

Although none of their plans has come close to being adopted by Congress, Erskine Bowles and Alan K. Simpson have updated their debt stabilization blueprint and say it may influence a bipartisan deal at a time when they believe one is increasingly possible.

The former chairmen of a bipartisan deficit reduction commission on Friday released new details of the updated framework they issued in February, saying the plan would save $2.5 trillion over the next decade beyond the $2.7 trillion in deficit savings already enacted. The deficit reduction projections are based on a comparison with what Simpson and Bowles describe as a “realistic” estimate of spending and tax revenue crafted by the Committee for a Responsible Federal Budget.

Under their own comparisons, Bowles and Simpson say their plan would put the debt held by the public on a downward path as a share of the economy, falling to at least 69 percent of GDP by 2023. That compares to a Congressional Budget Office estimate of 77 percent in 10 years that would result under current tax and spending law.

“Last December, the negotiating parties were as close as they’ve ever been on a plan to put our fiscal house in order,” Simpson and Bowles said in a statement, referring to last year’s fiscal negotiations between the White House and congressional leaders. “Although they were not able to reach agreement at that time, we continue to believe that agreement is possible.”

Simpson, a retired GOP senator from Wyoming, and Bowles, President Bill Clinton’s chief of staff, produced a deficit reduction plan as co-chairmen of Obama’s National Commission on Fiscal Responsibility and Reform in 2010. The commission did not approve that plan, but members of both parties have pointed to it as a promising framework.

Many lawmakers who praise the plan in general have shied away from endorsing its details, however.

And the latest incarnation may have less significance now since it arrives after President Barack Obama released his own detailed deficit reduction plan in his proposed fiscal 2014 budget and the House and Senate adopted contrasting fiscal 2014 budget resolutions.

Former House and Senate budget aide Stan Collender said the relevance of their effort has receded as the White House and budget writers on Capitol Hill have put their own plans on the table.

“Why submit yet another deficit reduction plan that absolutely is destined to fail?” he wrote in a blog post that heaped scorn on their new plan.

An effort to build support for the Simpson-Bowles approach last year fizzled when just 38 House members voted for a fiscal 2013 budget resolution based on the Simpson-Bowles blueprint. The House instead adopted the GOP leadership-backed budget resolution written by House Budget Chairman Paul D. Ryan, R-Wis.

Still, “Simpson-Bowles” remains a potent brand to some in Washington, and the two argue their plan provides the building blocks for a “principled compromise.”

Compared to a CBO baseline projection of spending, revenue and deficits under current law, the plan would reduce the deficit by $1.975 trillion over 10 years. That is somewhat less than the projected savings the CRFB calculates under its own baseline.

That would put its deficit reduction above that which was proposed in the Obama budget and the Senate budget resolution, but below the anticipated savings in the House budget resolution. Compared to the CBO baseline, the House plan would save $5.733 trillion, the Senate plan $1.76 trillion and the Obama budget $1.687 trillion.

Like proposals from the president and the Senate, the plan under what Simpson and Bowles call their Moment of Truth Project urges a gradual phase-in of deficit reduction to avoid an abrupt shock to the economy. It would repeal the automatic spending cuts in the $1.2 trillion sequester, but it would lower discretionary spending caps below pre-sequester levels, saving $385 billion over 10 years.

Similar to previous incarnations, the proposal urges adoption of a revised inflation measure called chained CPI, reducing the deficit by $280 billion over a decade. A tax overhaul in the plan aims to raise $585 billion in revenue, while proposed changes to health care including upping the Medicare eligibility age to 67 and requiring affluent Medicare recipients to pay more for their benefits would save $585 billion.

About 70 percent of deficit reduction in the Simpson-Bowles plan is attributed to spending cuts and 30 percent to increased taxes.

Rep. Mike Simpson, R-Idaho, who was among those who voted for the plan last year, said this week he continues to favor a Simpson-Bowles approach to crafting a deficit reduction deal.

Apr 25 2013