Bowles-Simpson Budget Reform and Ecstatic Memory

By :: June 26th, 2012

Have you noticed that as the details of the tough budget reform proposed by Alan Simpson and Erskine Bowles fade into memory, more politicians are embracing the plan developed by the chairs of the 2010 White House fiscal commission?

Oh, they don’t love the real plan—barely any elected official had a kind word to say about it when it was first proposed. But they are positively enamored of their own self-edited versions—usually with all the tough stuff conveniently deleted.  

Psychologists sometimes talk about “ecstatic memory”—an idealized recollection of some past event. Imagine, for example, guys at their college reunion gleefully reminiscing about that bender they went on senior year. In reality, they awoke with blinding hangovers in some cheap motel room. But in their memory, it was an evening filled with great music, beautiful women, and an all-around good time.

That’s a bit like what’s going on with Bowles-Simpson.  

No more than a handful of politicians have ever been willing to publicly support the actual plan, with all its gory details. The proposal would have reduced the deficit by $4 trillion over 10 years, including $2.2 trillion in unpopular spending reductions, $1 trillion in unpopular tax hikes and the rest in interest savings.  

You’ll recall President Obama said approximately nothing when the chairs of his own fiscal commission made their recommendations. Key congressional GOP leaders who served on the commission—including House Ways & Means Committee Chairman Dave Camp (R-MI) and House Budget Committee Chairman Paul Ryan (R-WI)--voted against the report.   

As recently as last March, the full House had a chance to vote on the plan. It got 38 votes—16 Republicans and 22 Democrats.

But now, it seems the plan has all sorts of new friends. Just a couple of weeks ago, Treasury Secretary Tim Geithner told the Council of Foreign Relations that the path to fiscal sustainability “began” with Bowles-Simpson. Remarkably, he added that President Obama’s own budget “although it differs in slight -- in small respects from that basic framework, is very close to that basic design.”   

Sure it is, except for the tax and spending parts.

Mitt Romney is another fan—absent the details. For instance, he embraces the bit of the plan that would cut individual tax rates to 28 percent. But he conveniently forgets that overall Bowles Simpson would have raised taxes by nearly $1 trillion over the next decade, increased rates on capital gains, and scaled back tax subsidies for home mortgages, charitable gifts, and employer-sponsored health insurance while wiping out tax preferences for nearly everything else.

Romney says he’ll slash tax breaks to pay for those low rates too. But unlike Bowles-Simpson, he won't say how. Maybe he shares their plan for cutting preferences. Only he isn’t telling.

And that’s the real problem. Bowles and Simpson told people just what they’d do. And that’s exactly what politicians avoid at all costs. Instead, like those drunken college boys, they prefer to reminisce about the old days that never were. Or in the case of Bowles-Simpson, a budget plan that never was.

6Comments

  1. Michael Bindner  ::  2:50 pm on June 26th, 2012:

    The entire need for Bowles-Simpson was to justify extending the Bush/Obama tax cuts for all but the highest incomes. It is a pay-for and nothing more. If Obama let all the cuts run out, either to play chicken or because he loses the election but the Democrats keep the Senate in sufficient numbers to stop extension by reconciliation (without exacting concessions), there would be no need for Bowles-Simpson. Sadly, both Bowles-Simpson and the Bipartisan Policy Center contain the usual tired recommendations from the CBO/GAO and think tank communities – although BPC did take a flier in the new by proposing a VAT (but not calling it one), although they quickly retracted the recommendation. I fear it will take an election to get really bold tax reform – the kind that stops most households from not only having to file, but even from seeing withholding on their paychecks. You won’t get that kind of boldness from either of the two candidates – and anyone who advocates something bolder will be marginalized or ignored by both the media and the think tank community.

  2. Tax Roundup, 6/27/2012: IRS secret shoppers and illegal hillbilly handfishing! « Roth & Company, P.C  ::  9:23 am on June 27th, 2012:

    […] policy nerds having too much fun: Bowles-Simpson Budget Reform and Ecstatic Memory (Howard Gleckman, […]

  3. AMTbuff  ::  10:16 am on June 27th, 2012:

    The tax and spending changes needed to achieve fiscal balance bear no resemblance to anything today’s voters, left or right, would find acceptable. The necessary changes are painful, but less horrifying than the economic collapse we will experience if we wait for the borrowing window to close.

  4. The Bowles-Simpson and Romney Tax Plans Have Almost Nothing In Common | Xtax  ::  3:02 am on August 10th, 2012:

    […] free to love Romney’s tax plan or hate it. But beware of politicians and their friends who pretend it and Bowles-Simpson are the same thing. They are […]

  5. Romney tax plan 'conceptually' close to Simpson-Bowles? No way! | Xtax  ::  3:07 am on August 11th, 2012:

    […] free to love Romney’s tax plan or hate it. But beware of politicians and their friends who pretend it and Bowles-Simpson are the same thing. They are […]

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