The fiscal commission's ambitious plan to reduce the deficit
"THE PROBLEM Is Real - the Solution Is Painful - There's No Easy Way Out - Everything Must Be On the Table - and Washington Must Lead."
So the co-chairs of the president's Commission on Fiscal Responsibility and Reform, Democrat Erskine Bowles and Republican Alan K. Simpson, say at the start of their ambitious budget blueprint, released Wednesday, to reduce the projected deficit by nearly $4 trillion by 2020. The Bowles-Simpson no-pain-no-deficit- reduction message is undeniably true - as much as the waste, fraud and abuse caucus or the grow-our-way-out-of-the-hole club would like to pretend otherwise.
But what is particularly valuable about their blueprint is how it lays out in chastening detail precisely how deep and widespread the pain will have to be to get the nation's finances on a sustainable path. The plan would impose deep cuts in domestic and military spending, and squeeze federal health-care spending far beyond what is contemplated by the new law. It would limit or repeal immensely popular tax breaks for mortgage interest and employer-provided health insurance to raise revenue while keeping income tax rates below their current levels. It would increase the amount of income subject to Social Security taxes, gradually raise the retirement age to 69 and cut scheduled benefits for most retirees; at the same time, benefits for the poorest recipients would be increased, and a hardship exemption would protect those unable to work past age 62.
In short, there is something in the Bowles-Simpson proposal for everyone to dislike - and as the details seep out, we expect nearly everyone will find a gored ox about which to howl. Our fundamental question - and we're questioning, not howling - is whether the proposal presses too hard, too fast on discretionary and mandatory spending. The overall goal is to get spending to 22 percent of gross domestic product by 2020 - it will be 23.8 percent this year - and eventually to 21 percent of GDP. That would be balanced out on the tax side by bringing revenue up to 21 percent of GDP, from the average of 18 to 19 percent over the past half-century. But the needs of an aging society may require more spending than the plan envisions; the enormous amounts being squeezed out of health care may not be realistic. The Social Security proposals are heavily tilted in the direction of cutting scheduled benefits over raising revenue - even as seniors are being asked to shoulder a greater part of health-care costs.
The moment the outline was released, other members of the panel raced to praise the co-chairs' hard work and bravery - and to disagree with one or another of their specifics. Even the White House, which created the commission, reacted less than enthusiastically. "These ideas . . . are only a step in the process towards coming up with a set of recommendations," said spokesman Bill Burton. This reaction underscores what is already well-known: how difficult it will be for the commission to achieve the necessary agreement among 14 of its 18 members required under its charter to put the recommendations to a congressional vote.
Whether 14 members can manage to agree on even milder measures is yet to be seen; its charge is to report by Dec. 1. Yet the work embodied in Wednesday's proposal means the commission, whatever its final disposition, will have added important value to an urgent national debate. Let the adult conversation begin.