On Feb. 18, 2010, President Obama created the National Commission on Fiscal Responsibility and Reform.
The 18-member commission, led by former U.S. Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles, was charged with “identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.”
Nine months later, the co-chairmen released a draft proposal that included five recommendations:
(1) Enact tough discretionary spending caps and provide for $200 billion in annual domestic and defense spending cuts starting in 2015;
(2) Pass tax reforms that would reduce rates, simplify the code and broaden the base;
(3) Address the rising cost of health care not by repealing the Affordable Care Act (ACA) but by strengthening the cost-cutting mechanisms present in the ACA while protecting doctors from a sharp scheduled cut in Medicare payments in exchange for other reforms and cost-sharing measures;
(4) Cut farm and student-loan subsidies and reduce government pension benefits; and
(5) Overhaul Social Security ”“ with an eye toward keeping the program solvent ”“ by raising the retirement age and reducing benefits for the wealthy.
The recommendations, as detailed in the Simpson-Bowles proposal, would achieve $3.8 trillion in deficit reduction and would ensure the solvency of the Social Security Administration.
But at a cost: the proposal violated sacred cows ranging from the mortgage interest tax deduction to defense appropriations to retirement benefits, and ultimately failed to secure the full support of the president and his Democratic and Republican counterparts on Capitol Hill.
At a press briefing following the publication of the draft proposal, Bowles called the plan “a starting point.”
The reality was that in the 112th Congress and the Obama White House, Simpson and Bowles ran into a dead end.
Executive Order 13531 stipulated that a final report would only be published with the support of 14 of the commission”™s 18 members.
Needless to say, that tally was never reached, as Democratic Rep. Jan Schakowsky, Democratic Sen. Max Baucus and Obama appointee Andy Stern joined Republican Sen. Mike Crapo and Republican Reps. Paul Ryan, Jeb Hensarling and Dave Camp in voting against the proposal.
Nobel Prize-winning economist and New York Times columnist Paul Krugman criticized the proposal at the time of its release, charging that it would further inhibit what was at the time and continues to be a treacherously slow economic recovery.
Fast-forward two years to Tuesday, Nov. 6, when millions of Americans will cast their votes for whom they want to lead their towns, cities, counties, states and country.
In some respects, this is no different from past elections. The results, regardless of who wins and who loses, will dictate the direction that each governmental entity, from Congress to the various municipalities, chooses to pursue.
However, this election is rare in that the victors will immediately be faced with issues of crushing proportions.
In an Oct. 18 letter to the president and to Congress, the CEOs comprising the Washington D.C.-based Business Roundtable urged Democrats and Republicans to negotiate a bipartisan agreement to prevent the country from going over the fiscal cliff.
“But merely avoiding the fiscal cliff is not enough,” the CEOs wrote. “We further urge you and your colleagues to enact legislation that truly restores the nation”™s long-term fiscal soundness.”
The framework for a grand bargain already exists. It was drafted two years ago by the Simpson-Bowles commission.
While two years ago the proposal submitted by Simpson and Bowles may have appeared unpalatable, failure to avert the fiscal cliff would spell global economic disaster.
It is time to give Simpson-Bowles its due.
