June 28, 2011

A BATTLE FOUGHT ON REPUBLICAN GROUND:

What’s needed: A $4 trillion gimmick-free deficit deal in two parts (Erskine Bowles and Alan Simpson, 06/27/11, The Hill)

What this country needs — and what the American people deserve — is a $4 trillion-plus, gimmick-free fiscal consolidation package that stabilizes and then reduces our debt as a share of the economy. Such a plan need not look exactly like the Fiscal Commission plan we produced, but it must cut wasteful or low-priority spending everywhere — in both the domestic and defense budgets, as well as the tax code where actual spending is dressed up as deductions, credits and other preferences. More importantly, this package must tackle the biggest source of our burgeoning debt — growing entitlement spending. That means it must slow the growth of healthcare and make Social Security sustainably solvent.

All this is a tall order, and not one that can be easily agreed to, let alone written into legislation, before the debt ceiling is hit at the beginning of August.

Given that, a two-part approach seems sensible, where policymakers agree to a large down payment now and follow it with more significant and structural reforms in the near future. For this to work, though, the down payment must be large — in the vicinity of $2 trillion — and it must at least begin to address entitlement growth.


Posted by at June 28, 2011 5:00 AM
  

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