According to the Center on Budget and Policy Priorities, the Budget Control Act amounts to $2.2 trillion in deficit reduction over the next decade. Some of it has already gone into effect. The fiscal cliff fight yielded about $600 billion. Together, that’s more than half of the $4 trillion that Simpson-Bowles initially called for.
Erskine Bowles is now asking for another $2.2 trillion: $1.6 from spending cuts (including $500-$600 billion in Medicare savings) and $600 billion more in revenue from revising the tax code.
All said, that’s five trillion.
Bowles on Meet the Press last Sunday: “We’ve got about $1.6 trillion worth of spending [cuts] we got to do, and we have about $600 billion in revenue we have to get from broadening the base, simplifying the code, and wiping out this backdoor spending in the tax code.”
Asked specifically about Medicare, Bowles responded, “On Medicare, we’re going to have to reduce spending by about $500 to $600 billion over the next ten years. You’re going to have to do it in some of the ways Mitch McConnell talked about. You’re going to have to look at some kind of cost sharing, some kind of means testing…at age…at lowering the price we pay the drug companies for drugs…at paying for quality instead of quantity…tort reform. And we have to do something about this whole end of life scenario…”
Going forward everything boils down to:
– $1.6 trillion more in spending cuts ($500-$600 billion from Medicare).
– $600 billion more in revenue from tax reform
Now how do you space them out? “Don’t disrupt the fragile economic recovery…Budget cuts should start gradually.” So says the Report of the National Commission on Fiscal Responsibility and Reform issued by Simpson-Bowles. That has also been the CBO’s view, and the view of virtually every nonpartisan economist.
The claim that the fiscal cliff deal adds to the deficit is based on the assumption thatall of the Bush tax cuts should have expired, but of course most of the people now making that argument are the very ones who wanted to make all of the Bush tax cuts permanent. From the point of view of not letting all of the Bush tax cuts become permanent, the government is making an estimated $620 billion in revenue. When have you ever heard Republicans admit that a tax cut adds to the deficit? Only now. It all depends on whether you view it as a tax increase on the wealthy or a tax cut for the middle class. If you view it as a tax cut for the middle class, it adds to the deficit, but if you view it as a tax increase on the wealthiest Americans then it counts as extra revenue. One thing’s certain: the government is getting billions more than it otherwise would have had the Republicans extended the tax cuts for everyone including the wealthiest.