CQ TODAY ONLINE NEWS
July 16, 2012 – 10:33 p.m.
Simpson-Bowles Authors Revisit Plan
By Paul M. Krawzak, CQ Staff
Authors of the Simpson-Bowles deficit reduction plan are rewriting their $4 trillion proposal to include an aggressive plan to control health care spending. The bipartisan group is trying to make the proposal politically palatable to Republicans as well as Democrats — and address the largest projected driver of increased spending.
Crafted in 2010 by what is formally known as the National Commission on Fiscal Responsibility and Reform, the proposal is also being revised to account for changes in the nation’s fiscal picture, including enactment of the debt limit increase law (PL 112-25) last August. The Budget Control Act imposed discretionary spending caps aimed at saving $1 trillion over a decade. The statute also provides for automatic, across-the-board spending cuts that are set to begin Jan. 2 and save $1.2 trillion over nine years.
“The original Simpson-Bowles didn’t do a whole lot in the health care arena, and we all know that health care is critical to this issue of controlling the debt over the years to come,” said Judd Gregg, a retired Republican senator from New Hampshire who has joined the effort to update the proposal.
Gregg served on the commission, commonly called Simpson-Bowles after co-chairmen Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, a Democrat who was chief of staff to President Bill Clinton. Gregg was among 11 members of the 18-member panel who voted for the proposal, which fell short of the 14 votes needed to guarantee consideration by Congress.
Although the fiscal commission’s plan included proposed changes to Medicare and Medicaid, such as creating a single combined deductible for Medicare and asking beneficiaries to pay more of their initial costs, they were too small for many Republicans. House Budget Chairman
Gregg, a former Senate Budget Committee chairman, said the commission “didn’t do anything in the Medicare, health care area because that was the directive that came from the president. He appointed the commission, and Simpson and Bowles honored his request that health care not be taken on. But I think everybody understands you really can’t get there from here without doing something on health care.”
Although he wouldn’t identify specific proposals under consideration, Gregg said the health care components of the revised plan will include initiatives discussed by bipartisan groups over the past two years. “The updating will not be radical ideas. They will not be dramatic ideas,” he said. “They will just be things where we think we can get general consensus.”
During deficit reduction negotiations last year, lawmakers from both parties reached potential agreement on hundreds of billions of dollars’ worth of cuts to Medicare and Medicaid that could be part of larger deal if an accord were reached on a revenue increase.
The goal now is to produce a revised plan in legislative form before the end of the year that could serve as the model for an agreement.
The task of updating the Simpson-Bowles plan has expanded in recent months beyond a bipartisan group of senators called the “Gang of Six,” or more recently “Gang of Eight,” to a larger collection of senators and representatives from both sides of the aisle.
“We’re a long way off from having everything decided,” said Senate Budget Chairman
The original fiscal commission plan would have reduced the deficit by $3.9 trillion over a decade through $2.2 trillion in spending cuts, almost $1 trillion in revenue increases and nearly $700 billion in interest savings.
Gregg said the group revising the plan intends to maintain the proposal’s basic structure, including spending cuts that exceed the amount of revenue that would be raised through an overhaul of the tax code that lowers rates while broadening the base.
Simpson-Bowles Authors Revisit Plan
“I think everybody understands you can’t get there from here without some revenues,” Gregg said. “And clearly you have to lock in the spending, and the spending has to be . . . dramatically higher than revenues. And this proposal probably will have more spending reductions and less revenue than the original Simpson-Bowles.”
A senior Democratic aide said the Gang of Eight continues to be centrally involved in crafting a revised proposal, with input from Simpson, Bowles and others. “We have a ways to go,” he said. “A number of pretty important issues are unresolved.”
Businesses Add Pressure
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, also is involved in updating Simpson-Bowles, according to others who are involved in the process. “She’s sort of the clerk of the works,” Gregg said. “She’s working hard to make sure that everybody is engaged and involved and included.”
CRFB on Tuesday will launch The Campaign to Fix the Debt, a bipartisan initiative aimed at increasing the chances of a debt deal through organizing support for one among businesses, lawmakers and outside groups.
“This is a really hard thing to do, and you can’t expect the White House or members of Congress to go out there and make really, really tough choices if they don’t hear that anybody cares,” MacGuineas said. “But the truth is, voters, business leaders, thought leaders really do understand all the benefits that will come from putting in place a big debt deal and understand the tremendous risks of failing to do so.”
Gregg and former Pennsylvania Gov. Edward G. Rendell, a Democrat, will co-chair the initiative. The campaign’s steering committee includes Honeywell CEO David Cote, who served on the fiscal commission; former Georgia Democratic Sen. Sam Nunn and former World Bank President Robert Zoellick, a Republican.
Though Gregg and two other Republican senators on the fiscal commission voted for the Simpson-Bowles plan, many more Republicans in both chambers have expressed opposition because they say the plan would raise taxes, even if tax rates went down.
Gregg believes the plan can get wide GOP support.
“I think most Republicans are willing to do a grand bargain where you get substantial deficit reduction through spending restraint in entitlements, and, in the process, you also get revenues through major tax reform,” Gregg said.