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We won’t know until Friday whether the final proposal from
A payroll tax holiday in 2011: Simpson and Bowles embrace the
Process, process, process: The Simpson-Bowles recommendations correctly identify congressional inertia as the central impediment to deficit reduction. And so they try to address it. To enforce discretionary spending cuts, they make spending that busts the caps ineligible for the reconciliation process, demand that
On the health-care side, they strengthen the
Defense spending and tax expenditures are major problems: The most positive impact the commission has had on the debate has been to move two formerly sacrosanct categories of spending onto the table. There’s a lot of money in the defense budget, and much of it is wasted, but when
A two-sided deal on
The tax section: In an odd bid for Republican support, the commission caps revenues at 21 percent of GDP. That’s higher than they are now, or than they’ve been historically. But we’re also a larger, older country than we’ve been historically, with more social spending to support. The commission’s mandate was to balance the budget, not decide the size of government. This overstepped it.
But at least that made some political sense. Simpson and Bowles’s timidity on tax options is odder. They correctly emphasize the need for tax reform, but they limit themselves to the design of the current system — a system which almost all experts agree is flawed. No mention of a carbon tax or a value-added tax, both of which are preferred by many, if not most, tax-policy experts.
The 2012 start date: Simpson and Bowles start their cuts in 2012, as they assume the economy will have recovered by then. But what if it hasn’t? A better approach would’ve been using an economic indicator as a trigger. For instance, we could’ve held stimulative measures like unemployment insurance and a payroll-tax cut until the unemployment rate dipped to 6.5 percent and then, when that milestone was hit, moved to austerity. As it is, there’s no real guarantee we’ll be recovered by 2012, and if we’re not, then we shouldn’t start cutting.
Raising the retirement age: If we want to cut
Hobbling government: Among the plan’s worst ideas is to cut congressional and
The same goes for the plan’s other aggressive cuts to the government. One proposal, for instance, relies on “attrition” — not to mention a three-year pay freeze — to sharply cut the federal workforce by 200,000. “
Cowardice on health-care reform: The plan’s health-care savings largely consist of hoping the cost controls (IPAB, the excise tax, and various demonstration projects) in the new health-care law work and expanding their power and reach. But the commission “does not take a position” on the new law. In the event that more savings are needed, they throw out a grab bag of liberal and conservative policies, ranging from a public option and government purchasing to