Popular storyline: In an attempt to get a Grand Bargain, President Obama proposed a centrist deficit reduction package. Congressional Republicans rejected that package only because it raised taxes, and were unreasonable for doing so. Like his fiscal commission cochairs Bowles & Simpson, the President proposed a responsible and balanced package of tax increases and long-term spending cuts that would solve our Nation’s fiscal problems. Because they are unwilling to consider tax increases, Republicans are therefore to blame for the failure of a Grand Bargain and for future fiscal collapse.
The problem with this storyline is that eight months ago three prominent Senate Republicans supported the Bowles-Simpson recommendations, which contained a net tax increase. The House Republicans on the commission did not support those recommendations, but Senators Coburn, Crapo, and Gregg did. No one would call any of these three men moderates – all are clearly conservative.
The President has stressed his willingness to include long-term entitlement reforms, including raising Medicare’s eligibility age to 67 and, reportedly, a correction to the CPI. Both are good policy changes, and both are elements of Bowles-Simpson. The President argues that Republicans should, in exchange, be willing to agree to the tax increases he proposes – both a significant increase in total tax revenues, and specific policies like higher marginal rates for “the rich.”
But the effects on beneficiaries of the Medicare eligibility increase, and the budget savings that would result from such a policy change, are significantly mitigated by the existence of ObamaCare subsidies for near retirees. This is nowhere nearly as big of a “give” as it would have been before the new health laws. A CPI change would both reduce entitlement spending and raise tax revenues, so the political pain is bipartisan.
More broadly, these changes would only temporarily slow spending growth. While they are politically significant, they fall far short of the size and type of changes that you need to make to solve our entitlement spending growth problem. At best they kick the can down the road several years.
Let’s look at a few of the other provisions that conservatives would support in the Bowles-Simpson package that are not in the President’s proposed Grand Bargain. Parenthetical references are to the Bowles-Simpson recommendations.
Health reforms in Bowles-Simpson that are not in the President’s proposal:
- Reform or Repeal the CLASS Act; (recommendation 3.2)
- Medical malpractice reform; (recommendation 3.3.12)
- Pilot a “premium support through the FEHB program” for Medicare; (similar to Ryan’s reform)
- Establish a long-term global budget for total health care spending. (rec. 3.3.13)
Social Security reforms in Bowles-Simpson that are not in the President’s proposal: