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Opening salvo

A controversial budget proposal begins a much-needed deficit conversation

Issue: "Biblical callings," Dec. 4, 2010

President Obama's deficit commission was supposed to be a test of the GOP's seriousness about the deficit. "Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up," said the president in January. "Because I'm calling their bluff."

But when the commission's chairmen-former GOP Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles-floated a compromise trial proposal on Nov. 10, Democratic leaders were the ones who refused to step up and take it seriously.

Simpson and Bowles proposed a mix of spending restraints and tax hikes, and they included plenty for both parties to dislike. Their plan would eliminate farm subsidies, cut defense and discretionary programs, and raise revenue by closing popular tax loopholes like the mortgage interest deduction and the child tax credit (while lowering rates) and raising the gasoline tax. Simpson and Bowles would also restrain the growth of Social Security by very slowly raising the retirement age, adjusting the cost of living index, and curbing benefits for wealthier retirees. They would raise the payroll tax on high-income Americans and raise premiums and co-pays for many Medicare recipients. "We don't leave anyone out of the crosshairs," said Simpson.

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While the White House didn't comment on the proposal's specifics, Republican leaders said the plan was flawed but a good starting point in budget discussions. Reps. Paul Ryan, Jeb Hensarling, and Dave Camp, who lead House Republicans on budget issues, called it "a provocative proposal" and commended Bowles and Simpson for "advancing the debate." House Democratic leader Nancy Pelosi, on the other hand, said the plan was "simply unacceptable."

At the heart of the debate is Social Security and Medicare, the two behemoth programs that threaten the government's future solvency. Pelosi said the Bowles-Simpson plan doesn't "do what is right for our seniors," but the central budgetary fact of the coming decades is that the baby boomers didn't have enough children to sustain Social Security and Medicare as currently structured. The below-replacement-level fertility rate of the boomers has left only three options: Curb the growth in Social Security and Medicare benefits, raise taxes dramatically, or pursue a combination of both.

If the Bowles-Simpson compromise accomplished nothing else, it started a conversation on which of those paths to take.

In the week following their trial balloon, Rep. Jan Schakowsky, a Democratic member of the commission, mapped out the most liberal alternative. Her proposal would rely almost exclusively on large tax hikes on business and investment and cuts in defense. Two other members of the commission, Ryan and former Clinton budget director Alice Rivlin, took a different approach, proposing to raise slowly the eligibility age for Medicare and turn it into a voucher program to buy private insurance for people who enter the program after 2021.

The commission is scheduled to release its final report on Dec. 1. If 14 of the 18 commission members sign off on the report's recommendations, it will be sent to Congress for a vote. Given the partisan makeup of the commission-which includes six Democrats from Congress, six Republicans from Congress, and several members from outside government-a supermajority is unlikely.

But stark budget realities are making some on Capitol Hill sound a bipartisan note, even if their leaders are not. "Listen, some of this stuff is not Democrat or Republican," Sen. Mark Warner, D-Va., told CNN. "Some of it's just math."

Timothy Lamer
Timothy Lamer

Tim is managing editor of WORLD magazine.

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