Bowles, Simpson punt on what Democrats would trade for higher tax rates

Neil Munro White House Correspondent
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Veteran Democrat Erskine Bowles told reporters Wednesday that he believes President Barack Obama is serious about cutting federal spending, and is willing to trim his controversial demand for increased high-income tax rates.

But neither he nor former Republican Sen. Alan Simpson, his co-chairman on the Simpson-Bowles deficit panel, would suggest any clear ideological concession that Democrats might make in exchange for Republicans making a divisive ideological concession to endorse higher tax rates on income over $250,000.

Instead, both advocates said that Democrats, including Obama, are willing to promise they will make cuts to future entitlement spending.

That’s a far cry from any concession to the GOP’s demand that government adopt marketplace incentives aimed at ensuring long-term savings in federal programs, which would depend on future Congresses agreeing to impose those painful cuts.

Marketplace incentives, say GOP advocates, can use beneficiaries’ self-interest to steadily reduce government costs, deliver better services and to shrink the number and power of government-funded advocates, consultants and managers.

Bowles and allied business leaders met with Obama and top White House officials Tuesday to discuss the impending fiscal crises, Bowles said at a Nov. 28 breakfast sponsored by the Christian Science Monitor.

“I came away from those meetings feeling those guys were really serious. … They were serious about reducing the debt,” said Bowles, who was President Bill Clinton’s chief-of-staff in 1997 and 1998.

Obama and his deputies want Republicans to lock in extra tax revenues by raising tax rates, he said, although there’s “some flexibility there,” he added.

But when asked if Democrats would offer ideological concessions on marketplace incentives to win ideological concessions on tax rates from Republicans, he and Simpson punted.

“We are going to have to reduce the cost of entitlement programs,” Bowles answered. “I’m not going to negotiate the deal here, but I will tell you that I showed the White House $600 billion of cuts in health care entitlements yesterday. … Some of them are reforms, real reforms,” he said.

When asked again if the reforms consist of cut in promised spending or the addition of marketplace incentives to encourage efficiency by beneficiaries, Bowles declined to comment.

“That I don’t want to get into, because I want these guys to get a deal,” he responded.

Bowles and Simpson were co-chairs of the National Commission on Fiscal Responsibility and Reform, whose deficit-reducing plan was released December 2011. Obama, Democrats and Republicans largely ignored the plan.

Simpson also evaded TheDC’s question about a Democratic concession on marketplace incentives in exchange for GOP concession on tax-rates.

“I really can’t tell you,” he told TheDC.

“All I can tell you is that [Rep. Paul] Ryan got savaged because Ryan was dealing with the Mastadon in the kitchen, and that is health care,” he said.

That’s a nod towards marketplace incentives, because Ryan’s plan relied upon such incentives, prompting sharp criticism by Democratic politicians and lobbies, including Obama.

Any health care reform would have to deal with people who refuse to embrace healthy behavior, who are overweight, or who “chose a lifestyle to do booze, drugs and tobacco and they’re not exactly going into preventive care,” Simpson told TheDC. Any reform would also to deal with doctor’s rising costs and tort lawyers, he added.

“How do think anything like this can work?” he said, hinting at the need for marketplace incentives.

However, the former Republican Senator declined to call for such incentives or to urge Democrats to embrace those incentives.

“They’re going to have to figure it out,” he said.

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