Last week, Erskine Bowles and Alan Simpson, co-chairs of the Moment of Truth Project, released a new budget plan, titled “A Bipartisan Path Forward to Securing America’s Future.” This updated plan is the latest attempt by these two men to restore some sanity to our nation’s fiscal situation. While it leaves much to be desired, the plan is a step in the right direction as Congress moves into yet another phase of the ongoing budget debate.
The plan does not balance the budget, but it recommends a series of rational spending cuts and a reduction of subsidies and tax deductions to curb debt growth by $5.2 trillion over the next 10 years. Most of the savings will come from spending cuts, although about 30 percent will come from revenue increases. The plan would force both Republicans and Democrats to compromise in order to slow our current spending trajectory.
In 2010, President Obama appointed Simpson, a former Republican senator from Wyoming, and Bowles, a former chief of staff to Bill Clinton, to co-chair the bipartisan National Committee on Fiscal Responsibility and Reform. The goal of the committee was to address the national deficit. The pair successfully led that committee, which made recommendations to Congress on how to bring down the deficit. Sadly, Obama ignored the recommendations of his own committee, and our nation’s debt kept right on growing. Since 2007, our debt has more than doubled as a share of the economy. Today, it is more than 73 percent of our gross domestic product.
Because our debt is growing so quickly, the newly revised plan put forward by Simpson and Bowles focuses on spending cuts, including adjustments to some of our entitlement programs like Medicare.
While the plan is ambitious, it does not go far enough. More troubling, it does not focus enough on changing and challenging certain status quo items.
For example, our health care costs are high in part because we pay the highest drug costs in the world — an estimated $45 billion in 2011. To resolve this, U.S. consumers and insurance companies should be allowed to import drugs if drug companies keep their U.S. prices the highest in the world. We allow doctors to be incentivized by drug companies to use their drugs. The new plan does not discuss how drug companies are financially seducing doctors and contriving tests for marginal improvements to justify increased costs. It also does not offer plans to reduce end-of-life spending, such as requiring people to state their end-of-life preferences when they get their driver’s license.
Also, the plan leaves certain sacred cows that are growing out of control — like the Social Security Disability Insurance program (SSDI) — off the table. While the report does say SSDI is in need of reform, the authors merely encourage policy makers to look into ways to “modernize the programs [sic] objectives, rules, and eligibility criteria.” The SSDI program is being misused, discouraging people from working, and instead, anchoring them to a lifetime of expensive dependency. Any real, long-term reform to our nation’s economic situation must address runaway entitlement problems like SSDI.
Regardless of the proposal’s shortcomings — and Simpson and Bowles themselves admit this new iteration of their plan is “not the perfect plan” — it is good to see a bipartisan attempt to get the United States back on track. These two political heroes deserve our praise. More importantly, their plan merits attention and a vote in Congress.
The future of our nation is at stake. If our political leaders continue to avoid real action on our long-term fiscal situation, future generations of Americans will rightfully blame us for their suffering.
Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.