Simpson, Bowles propose $2.4 trillion U.S. deficit reduction

[I AM NOT THAT GUY 5,715]

WASHINGTON — Two key deficit experts on Tuesday offered an updated plan to reduce U.S. government deficit spending by $2.4 trillion over 10 years through a combination of spending cuts, a healthcare overhaul and tax reform.

The proposal came from Erskine Bowles, a Democrat who served as President Bill Clinton's chief of staff, and former Republican senator Alan Simpson, the co-chairmen of a former fiscal commission that President Barack Obama launched during his first term. It adds to the Washington debate on what to do about $1 trillion in annual deficits and a $16 trillion national debt.

Simpson and Bowles both doubted Congress and the White House would be able to come up with a plan to avoid the cuts, known as sequestration.

It is unclear how much impact the plan will have because it contains elements that have been non-starters for each party - further tax revenue, which has been rejected by Republicans; and even deeper cuts to entitlement programs such as Medicare, a notion rejected by Democrats.

Under the proposal, about one-fourth of the $2.4 trillion in deficit reduction would come from healthcare reforms and another fourth from tax reform.

The remaining reduction would come from a combination of mandatory spending cuts, stronger caps on U.S. discretionary spending, using the Consumer Price Index for inflation-indexed provisions in the budget and lower interest payments.

"The proposal also calls for a parallel process to make Social Security sustainably solvent and further actions to bring transportation spending and revenues in line and limit per capita cost growth in federal budgetary commitment to healthcare to about the growth rate of the economy," according to a summary of the plan.

Overall, the plan seeks to keep the nation's debt under 70 percent of gross domestic product in a decade, and to keep lowering that ratio in the years after.

Their latest proposal would target $600 billion in cuts over 10 years to the nation's healthcare system under Medicare and Medicaid insurance programs for the elderly, disabled and poor.

That is more than the $400 billion the Obama administration has said it would accept.

It calls for using so-called tax expenditures to help pay down the U.S. deficit, a move opposed by Republicans who want such expenditures to be used solely to lower tax rates.

It does not get specific, however, and tax expenditures include politically popular items like the tax break for mortgage interest and charitable giving.

"We're going to have to push the White House on healthcare, we're going to have to push the Republicans on revenue," Bowles said on CNBC.

"Over the next 10 years, there's probably $13 trillion worth of tax expenditures in the tax code ... and we're talking about using about $500 billion of that to reduce deficit and the rest they can use if they want to reduce rates," Bowles said. "I think that's a pretty fair trade."

He said the extra healthcare savings are necessary and would include more cost sharing and means testing as well as paying for quality of care provided, rather then the number of doctor's visits or tests - all ideas long-touted to curb the nation's rising healthcare costs, especially among Democrats.

Bowles and Simpson said it was unlikely either Republicans or Democrats would agree on a deal until after the harsh budget cuts kick in next Friday.

"I think when this really stupid, stupid, stupid sequester goes into effect and people have to start standing in lines for three hours to get through security at the airports, they're going to visibly feel how this government has become completely dysfunctional," Bowles told CNBC. "I think they will really get angry with these people in Congress and the administration.""

Simpson, who gave leaders on both sides a C-plus grade on handling the deficit, added: "It'll be chaos."

http://xfinity.comcast.net/articles/news-general/20130219/US-USA-OBAMA-DEFICITS/

[Caryh 5,206]

They make sense, so no one in Washington is going to listen to them.

[Mr. Big Dog 10,747]

They make sense, so no one in Washington is going to listen to them.

They also both get to live on the federal dole for the rest of their lives. Easy to prescribe austerity that doesn't apply to you, isn't it?

[Caryh 5,206]

They also both get to live on the federal dole for the rest of their lives. Easy to prescribe austerity that doesn't apply to you, isn't it?

It certainly is, and thats one of the things that should be fixed. But overall its a pretty small part of the budget. The country really can't continue to grow spending faster than revenue, and neither party has done a thing about it since Clinton was in office.

[Mr. Big Dog 10,747]

It certainly is, and thats one of the things that should be fixed. But overall its a pretty small part of the budget. The country really can't continue to grow spending faster than revenue, and neither party has done a thing about it since Clinton was in office.

There are a couple of things that need to happen: bring defense spending back to sane levels and get serious about cutting the cost of healthcare - whatever that takes. As long as these two issues are allowed to linger, there will be no solution on the budget. Thing is, neither this Congress nor the next nor the one after that will do anything meaningful about either of these two things.

[I AM NOT THAT GUY 5,715]

There are a couple of things that need to happen: bring defense spending back to sane levels and get serious about cutting the cost of healthcare - whatever that takes. As long as these two issues are allowed to linger, there will be no solution on the budget. Thing is, neither this Congress nor the next nor the one after that will do anything meaningful about either of these two things.

It would certainly help to have a President and Senate that was seriously contemplating reducing public spending, rather than expanding failed social programs. Old people that already hold 70-80% of the wealth in this country could certainly be means tested, before they receive any government benefits. And you are well founded when you can easily say 90% of defense spending is unnecessary. Healthcare is easy - either completely deregulate it, no government oversight at all, or let the government take complete control, pay for everybody's healthcare, and ration it on a cost-benefit-to-society basis.