The Fiscal Cliff: Part 3-Simpson Bowles

The Simpson-Bowles Plan is a plan for improving our nation's fiscal situation produced by the National Commission on Fiscal Responsibility and Reform, and named after the commission's co-chairs, former Republican U.S. Senator from Wyoming Alan Simpson and former Clinton Chief of Staff Erskine Bowles, a Democrat.  This commission was created by president Obama in 2010 to identify policies that could be used to solve our budgetary crises.

The Simpson-Bowles Plan goes beyond what many other ideas to reduce deficits entail.  Both Simpson and Bowles bravely recognize the need for increased revenue and reduced spending to get the nation back on the track of financial solvency.  If we want to be serious about reducing our debt, there will be no easy decisions.  Money must come from all places possible, and this includes reforms to the tax code, social security, and the defense budget.

As you can see in the figure above, the Simpson-Bowles proposal (Co-Chair Proposal) goes far beyond what any major party has come up with.  What the plan might lack in depth in any one any it makes up for it in its balanced approach to cutting debt.  Paul Ryan's plan includes more cuts to domestic discretionary spending, but leaves defense spending alone, for the most part.  The Simpson-Bowles approach also increases revenue, partly by eliminating loopholes, partly by raising taxes.  They understand that we cannot have a balanced approach without an increase in revenue.  Until now, we have never fought a war without an accompanying tax increase to pay for it.  Now, with wars in Afghanistan and Iraq, we have had two.  This simply is not sustainable.

We hope that Senators and Congressman, as well as the President, after initially spurning this plan, take a second look at it in the midst of fiscal cliff negotiations.  We need real, concrete plans to cut debt if we are to ensure the financial stability of this nation for years to come.  In coming posts, we will elaborate on details of the plan, and explain why its ideas are important.