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Moment of Truth Project--Highlights of "Simpson-Bowles" Budget Alternative

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Highlights of “Simpson-Bowles” Budget Alternative

Takes the framework and benchmarks set by the President’s bipartisan National Commission on Fiscal Responsibility and Reform and puts them into a budget resolution framework.  Provides a blueprint for committees of jurisdiction to draft specific policies to achieve savings targets, based on the general principles outlined in the Simpson-Bowles report.

Key Principles

  • Embodies the Fiscal Commission approach
  • Shared sacrifice: Everything is on the table
  • Big enough to matter: Cuts the deficit by over $4 trillion over the next 10 years, sufficient to stabilize the debt by 2015 and reduce debt as a percentage of GDP below 70% by 2020
  • Balanced approach: Achieves deficit reduction with 2/3 spending cuts, 1/3 tax reform
  • Smart savings instead of dumb cuts Permanently repeals the sequester required by the Budget Control Act and replaces across-the board cuts with a balanced, comprehensive fiscal plan to reduce the deficit and stabilize the debt

Main Elements

Tax reform:

  • Comprehensive tax reform to promote growth, simplify the tax code, reduce marginal tax rates across the board and reduce the deficit by $1 trillion through 2021
  • Reduces the $1.1 trillion in annual tax expenditures and tax breaks
  • Reduce tax rates for individuals, small businesses, and corporations

Health care:

  • Immediate reforms achieving savings of $485 through 2021 based on principles and framework in Simpson-Bowles report to pay for permanent SGR fix and reduce costs over the next decade
  • Sets a limit on long-term growth for federal health care spending of GDP+1 requiring additional reforms if the policies in this resolution and other reforms fail to keep spending below targets

Discretionary spending:

  • Total discretionary spending for fy13 of $1.043 trillion and growth limited to 1% below inflation after 2013 for total savings of $625 billion beyond caps set in Budget Control Act
  • Additional savings divided proportionally between domestic and defense spending

Other provisions

  • Instructions for committees to find approximately $300 billion in savings from other mandatory programs such as agriculture and federal retirement
  • Shifts to a more accurate measure of inflation for all provisions in the budget indexed to inflation
  • Bipartisan cooperation to enact plan to strengthen Social Security and put it on a fiscally sustainable path based on the principles and framework outlined in Simpson-Bowles report
  • Fully repeals sequester and replaces with comprehensive fiscal plan
  • Strong enforcement mechanisms to enforce spending cuts and ensure budget remains on a path to stabilize and reduce debt as a percentage of GDP

Major Savings by Category in Simpson-Bowles Budget Alternative




Discretionary Savings below CBO Current Policy Baseline Required by Initial BCA Caps



Additional Discretionary Savings Beyond BCA Caps



Total Discretionary Savings



Gross Health Care Savings






Cap Health Growth at GDP+1%



Net Health Care Savings



Other Mandatory Savings (Including All PI)



Chained CPI



Match Highway Spending and Revenues



Comprehensive Tax reform



Social Security Reform (Excluding Chained CPI)



Interest Savings






Deficit at End of Window (2017/2022) in Percent of GDP



Debt at End of Window (2017/2022) in Percent of GDP




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Mar 27, 2012
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A summary of the "Simpson-Bowles" Budget Alternative.