Former Republican Senator Alan Simpson and former Clinton White House Chief of Staff Erskine Bowles will release a new plan today to reduce the deficit by $2.4 trillion over the next decade. The pair of deficit hawks previously co-chaired a 2010 commission on fiscal reform (which failed) and then released a proposal for $6.3 trillion in deficit reduction.

That plan became a go-to talking point for Republicans — except, of course, whenever Obama recommended similar targets.

The new Simpson-Bowles plan adds an additional $2.4 trillion in savings onto the approximately $2.4 trillion in deficit reduction the United States has already carried out since 2010. Roughly three-fourths of that new $2.4 trillion would come from spending cuts and savings on interest payments:

The outline below is not meant as a revision to the original Fiscal Commission plan, but rather builds upon where elected leaders were in their negotiations last year. […]

[W]e call for an additional $2.4 trillion of deficit reduction over the next ten years. Roughly one quarter of those savings should come from health care reforms and another quarter from tax reform. The remaining savings should come from a combination of mandatory spending cuts, stronger discretionary caps, cross-cutting changes such as adopting the chained CPI for inflation-indexed provisions in the budget, and lower interest payments. This $2.4 trillion should exclude savings from policies such as the war drawdown.

There’s a very simple problem with Simpson and Bowles’ latest proposal: It represents a massive shift away from their own previous target and towards even more spending cuts.

As the Center On Budget and Policy Priorities previously laid out, the original 2010 Simpson-Bowles plan split its $6.3 trillion in deficit savings between $2.9 trillion in spending cuts, $2.6 trillion in tax revenue, and $800 billion in reduced interest payments on the debt. Since then, the country has passed roughly half of those recommended spending cuts — but less than a quarter of the recommended tax increases, according to recent calculations from the Center for American Progress.

Between the budget deals in the spring of 2011 and the Budget Control Act, which averted the debt ceiling crisis that same year, spending has been cut by $1.5 trillion and interest payments reduced by another $200 billion. Then the American Taxpayer Relief Act, which solved the impasse over the “fiscal cliff,” raised $600 billion in new tax revenue.

So if Simpson-Bowles are interested in “building upon” what lawmakers have already achieved, the logical thing to propose is another $1.4 trillion in spending cuts plus another $2 trillion in additional tax revenue. Or if they’re happy with their new $4.8 trillion target — rather than the original $6.3 trillion — their new proposal should heavily favor tax increases, since deficit reduction so far has favored spending cuts by three to one. Instead, Simpson and Bowles are proposing $1.8 trillion in new spending cuts and reduced interest payments, and only $600 billion in additional revenue.

Read more

The history of the Republican Party’s relationship with the Simpson-Bowles debt reduction plan is a bit puzzling. Rep. Paul Ryan (R-WI) helped derail it in committee, then the RNC was outraged when President Obama did not embrace it. Now, the Republicans are rejecting the president’s most recent offer to avoid the so-called fiscal cliff, which is remarkably similar to the original Simpson-Bowles plan.

As Michael Linden at the Center for American Progress points out, President Obama’s plan contains “90 percent of Simpson-Bowles spending cuts and 60 percent of the plan’s revenue.”

However, though Republicans voiced support for Simpson-Bowles, there has been no such endorsements of the President’s latest plan, which a spokesman for House Speaker John Boehner (R-OH) called “unrealistic.” Sen. Minority Leader Mitch McConnell (R-KY) said the President’s plan does not meet his “own test of ‘balance.’” This is a departure from other — and older — Republican stances on the commission:

– Sen. Lamar Alexander (R-TN) hoped to vote on Simpson-Bowles in April 2012.

– Sen. John McCain (R-AZ) called Simpson-Bowles “an excellent blueprint.”

– Sen. Lindsey Graham (R-SC) said there was “no time to wait” to vote on Simpson-Bowles.

– Fred Barnes, writing in the Weekly Standard, said Republicans should stress Simpson-Bowles and said, “Republicans agree [with commission's recommendations] and should say so loudly.”

Though Republicans support Simpson-Bowles, which calls for more revenue increases than President Obama, there is no support for a similar plan when it comes from the White House.

– Greg Noth

Since the election, many Republicans have come out in support of the Bowles-Simpson plan for deficit reduction. For instance, Sen. Lindsey Graham (R-SC) said, “I’m willing to say yes to Simpson-Bowles,” newly elected Minority Whip Sen. John Cornyn (R-TX) called it a “roadmap,” and Sen. Saxby Chambliss (R-GA) said the country should use “the Simpson-Bowles approach.” Senate Minority Leader Mitch McConnell (R-KY) reacted to President Obama’s demand for $1.6 trillion in new tax revenue by saying, “let’s be clear: an opening bid of $1.6 trillion in new tax hikes isn’t serious. It’s more than Simpson/Bowles or any other bipartisan commission has called for.”

However, new report from the Center for American Progress explains that the Bowles-Simpson plan for deficit reduction actually creates almost $500 billion more revenue than President Obama’s budget. If fully enacted, the bipartisan commission’s plan would generate $2.7 billion from tax increases by 2022:

The oft-cited figure is that the Bowles-Simpson plan would raise $1.2 billion in new revenue. However, this misses an important piece of the puzzle: the panel assumed the Bush tax cuts for the wealthiest Americans would expire and create $1.5 billion in new revenue separate from the $1.2 billion found elsewhere.

The bipartisan committee that produced the report, known as The National Commission on Fiscal Responsibility and Reform, was created by President Obama in 2010. Its proposal never made it to Congress, though, because Republican members of the House — led by former Vice Presidential candidate Paul Ryan — voted it down.

– Greg Noth

As the deadline nears for the Congressional super committee to finalize a deal to address the nation’s deficit, it’s becoming increasingly apparent that Republicans and Democrats on the committee will be unable to reach an accord. By now, the nature and cause of the impasse should be bitterly familiar to most Americans: Congressional Republicans refusal to consider tax increases as a means to reduce the deficit. After insisting on an extension of the Bush tax rates for the wealthy — which alone will blow at least a $670 billion hole in the U.S. budget — and receiving an agreement from Democrats to cut nearly a trillion dollars in spending, Republicans have offered a paltry $300 billion in new revenue. At the same time, the top Republican on the committee has declared that every “penny” in additional revenue is a “step in the wrong direction.”

This dance should by now be familiar. This past summer, during the debt ceiling negotiations which produced the super committee, the Republicans nearly drove the country into financial default by refusing to allow tax rate increases even as they insisted that Democrats make up the difference in deficit reduction through trillions in destructive spending cuts. Indeed, Standard & Poors specifically cited the GOP’s intransigence on revenue raising when it downgraded the United States’ credit rating.

And before that, in a budget deal hammered out last December, Republicans established their ongoing theme by refusing to allow the Bush tax cuts to expire for even the top brackets — at a cost of $133 billion, and benefiting a mere 4.8 million people.

ThinkProgress has compiled the video evidence of the GOP’s singular ongoing obsession. Watch it:

The congressional fiscal super committee that is tasked with crafting a deficit reduction package of at least $1.5 trillion met today with the architects of the Bowles-Simpson and Rivlin-Domenici deficit reduction plans. Both Democrats and Republicans have recently released their initial offers to the super committee, which seems no nearer to cutting a final deal than it did when it was first formed.

As Igor Volsky noted earlier this week, the plan that the Democratic members of the super committee released is well to the right of bipartisan plans like Bowles-Simpson or the plan crafted by the Senate’s Gang of Six (both of which included unnecessary cuts to vital programs). In fact, the Democrats’ plan has about six dollars in spending cuts for every dollar in new revenue (while Bowles-Simpson had a two to one ratio).

The Republicans, meanwhile, released a “deficit reduction” plan that, depending on the revenue baseline assumed by both Bowles-Simpson and the Gang of Six, would cut taxes to the tune of more than $800 billion over 10 years, according to the Center on Budget and Policy Priorities:

The new Republican plan provides for slightly more than $3 trillion in deficit reduction over the next ten years, relative to a current-policy baseline that assumes extension of all the 2001-2003 tax cuts. (See Table 1.) Of that amount, only about 1 percent of the deficit reduction ($40 billion) stems from revenue increases. And, compared to the “plausible baseline” that the Bowles-Simpson Fiscal Commission and the Senate’s Gang of Six used, which assumes expiration of the upper-income tax cuts, the latest Republican plan actually provides for tax cuts of more than $800 billion over ten years.

Overall, “the Republican plan would produce $1 trillion less deficit reduction than the Democratic offer, relative to any baseline.” The Republicans, in their zeal to indiscriminately reduce taxes regardless of the country’s ability to afford it, evidently believe that no deficit reduction plan is complete without blowing a new hole in the federal budget.

Tomorrow, President Obama is expected to formally announce the creation of a commission charged with formulating a plan to address the country’s long-term budget deficits. Obama will reportedly name former Republican senator Alan Simpson and former Clinton White House official Erskine Bowles as the commission’s chairmen.

When Obama first made his intention to create a deficit commission known and said that he was “agnostic” regarding the proposals that it would consider, many Republicans went on the offensive, claiming that the commission was simply a way to push through tax increases. Instead, the GOP has been advocating for a commission that is explicitly barred from considering taxes and can only focus on cutting spending.

Fortunately, Simpson isn’t buying that argument, and in an interview with the New York Times he “dismissed claims from Republicans that reining in deficits would be easy or accomplished with spending cuts alone”:

“But they don’t cut spending,” he said, citing the administration of President George W. Bush when Republicans also controlled Congress. “Don’t forget the Republicans never vetoed a single bill in six and a half years. How is that for cutting spending?” “To say that all we have to do is take care of waste, fraud and abuse, and foreign aid is a like a sparrow’s belch in the midst of typhoon,” he said. “That is nothing, less than 1 percent of the budget.”

“There isn’t a single sitting member of Congress — not one — that doesn’t know exactly where we’re headed,” Simpson added. “And to use the politics of fear and division and hate on each other — we are at a point right now where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American.”

Simpson is exactly right. Not only are our current deficits overwhelmingly the result of Bush administration policies and the economic downturn (which has seriously depressed tax revenue), but trying to address long-term deficits on the spending side alone can’t be done. Those who blame the deficit on earmarks (which make up less than one percent of the budget) or think that the budget can be balanced by simply freezing spending are, as CAP’s Michael Linden has put it, “peddling fiscal snake oil.”

As former Reagan economic official Bruce Bartlett wrote, “every serious budget analyst — I mean every — knows that revenues must be part of the solution to our deficit problem…[T]he idea that we can or even should embark on serious deficit reduction with no tax increase whatsoever is grossly immature and unworthy of consideration.” But the Republican leadership is still waffling about whether or not it will even agree to name members to the commission, crystallizing its insistence on staying on budget fantasy-land. It’s good to see that, at least, the Republican chairman of the commission is refusing to play the same game.

This week, the Senate is expected to defeat a proposal by Sens. Judd Gregg (R-NH) and Kent Conrad (D-ND) to form a commission charged with crafting ways to reduce the country’s long-term deficits. But the commission idea is not dead!

Instead, it looks like the Obama administration will create a commission by executive order, which will be “granted broad authority” to come up with a series of deficit reducing “changes” to the tax code and spending programs that Congress would then consider. But if you thought Gregg would be pleased with this development, you’d be wrong:

It’s a fraud among anyone interested in fiscal responsibility to claim an executive order could structure something that would actually lead to action.

This is pretty amusing coming from Gregg, whose “precedent for success” in this matter is the 1983 Greenspan Commission. According to Gregg, the Greenspan Commission was “the catalyst that drove the process” behind that year’s fix for Social Security. But the Greenspan Commission was created by executive order.

Gregg is a good example of what CAP’s Michael Linden is calling “deficit peacocks”: lawmakers who “like to preen and call attention to themselves, but are not sincerely interested in taking the difficult but necessary steps toward a balanced budget.” For instance, while Gregg is criticizing those he deems not sufficiently “interested in fiscal responsibility,” he’s voting to cut taxes for the heirs of multi-millionaires. As the Atlantic’s Derek Thompson put it, “if you want to hear politicians croon utter nonsense about the debt with their fingers crossed behind their backs, please listen to Sen. Judd Gregg.”

At the same time, the administration’s design for a commission is about the same as Conrad and Gregg’s. It would involve 18 commissioners — six appointed by Congressional Democrats, six by Republicans, and six by the administration, with the understanding that the administration would name at least two Republicans — and 14 of the 18 would need to agree before their proposal made it to the floors of Congress. So the odds of anything productive coming out of this process are exceedingly small (which means that, as Matt Yglesias pointed out, there’s little point in wasting a lot of energy opposing the commission’s creation).

The only way a commission like this can possibly work is if it’s given a concrete goal and told to find ways to achieve said goal. As Stan Collender pointed out, that’s why base closing commissions work: everyone agrees that bases need to be closed, but they don’t want to decide which ones. But even with an explicit budget goal, I don’t see Republicans on the commission agreeing to anything that even remotely resembles a tax increase, without which budget balance is impossible. It’s far more likely that the commission bogs down into gridlock, and if a solution does come around, it will be because of some agreements that are crafted outside of the commission structure — just like with the Greenspan Commission.