Sorry, Alan and Erskine—it's not nearly enough
The WashPost blog, November 11, 2010
I'm torn between cheering some of the "tough choices" (by Washington standards) that Erskine Bowles and Alan Simpson have usefully put on the table—and running from the room screaming at how phony and inadequate so many of the steps they've laid out are, despite first-day commentary hailing them as "bold." Here's a two-minute Radical Centrists's guide to how to think about what they've floated (drafted at the airport while waiting for a flight, so forgive the short strokes).
21 versus 22. As I wrote in The Post a few months ago, the Bowles/Simpson plan to hold spending to 21 percent of GDP as the boomers age is a dangerous fantasy. All you need to know is that Ronald Reagan ran government at 22 percent of GDP when 76 million baby boomers weren't retiring. Today we're on the verge of doubling the number of folks on Social Security and Medicare. The Bowles/Simpson size of government goal is a fantasy—it will not happen. Unfortunately, this wrongheaded goal undermines much of what they propose, since it's the organizing feature of their proposal.
2037. The co-chairs don't balance the budget until 2037! The outer limits of the ambition of a commission set up to get our fiscal house in order is thus a 27-year plan to balance the budget? Oy. The most you can say is that it's faster than the plan offered by that other falsely-hailed fiscal conservative, Paul Ryan, whose "Roadmap" wouldn't balance the budget until the 2050s!
Health-care dreaming. The long-run savings in health care are merely assumed—they say growth rates after 2020 will slow to some rate closer to GDP growth than they are today. Everyone seeks such a result, but no one has any real idea how to achieve it, because it means taking on the Medical Industrial Complex in ways unthinkable today. But is it possible? You bet. Mighty Singapore spends 4 percent of GDP on health care versus our 17 percent, with as good or better health outcomes. We CAN do more with less. Whether we have the political gumption to get there is the multi-trillion dollar question.
Social Security. The co-chairs don't raise the retirement age to 68 until 2050, and to 69 until 2075 (a blow for today's newborns, but tough choices have to be made...). So we have a bold, 40- to 65-year plan to bring benefit eligibility ages in line with reality, when life spans are already 14 years higher than when the retirement age of 65 was set decades ago. Come to think of it, in 2075 people will probably be living to at least 100. A task for a future commission! Meanwhile, the co-chairs don't even phase in "progressive indexing" of benefits until 2050, when a more thrifty shift to "price indexing" much sooner would be justified (this is a longer, seemingly arcane, yet essential discussion for a future column on intergenerational equity).
Gas tax. On my reading, the co-chairs call for a bold new 15-cent a gallon gas tax. Ross Perot called for 50 cents twenty years ago. Our problems grow, our ambitions shrink.
Good news! The co-chairs do put tax expenditures (or subsidies) for things like employer provided health care and mortgages on the table for cuts. That's genuinely terrific and worthy of applause.
I know that within the conventional boundaries of debate, what Bowles and Simpon have offered is a step forward. But when the conventional boundaries of debate are utterly inadequate to our actual challenges, someone has to say so.
The WashPost blog, November 11, 2010
I'm torn between cheering some of the "tough choices" (by Washington standards) that Erskine Bowles and Alan Simpson have usefully put on the table—and running from the room screaming at how phony and inadequate so many of the steps they've laid out are, despite first-day commentary hailing them as "bold." Here's a two-minute Radical Centrists's guide to how to think about what they've floated (drafted at the airport while waiting for a flight, so forgive the short strokes).
21 versus 22. As I wrote in The Post a few months ago, the Bowles/Simpson plan to hold spending to 21 percent of GDP as the boomers age is a dangerous fantasy. All you need to know is that Ronald Reagan ran government at 22 percent of GDP when 76 million baby boomers weren't retiring. Today we're on the verge of doubling the number of folks on Social Security and Medicare. The Bowles/Simpson size of government goal is a fantasy—it will not happen. Unfortunately, this wrongheaded goal undermines much of what they propose, since it's the organizing feature of their proposal.
2037. The co-chairs don't balance the budget until 2037! The outer limits of the ambition of a commission set up to get our fiscal house in order is thus a 27-year plan to balance the budget? Oy. The most you can say is that it's faster than the plan offered by that other falsely-hailed fiscal conservative, Paul Ryan, whose "Roadmap" wouldn't balance the budget until the 2050s!
Health-care dreaming. The long-run savings in health care are merely assumed—they say growth rates after 2020 will slow to some rate closer to GDP growth than they are today. Everyone seeks such a result, but no one has any real idea how to achieve it, because it means taking on the Medical Industrial Complex in ways unthinkable today. But is it possible? You bet. Mighty Singapore spends 4 percent of GDP on health care versus our 17 percent, with as good or better health outcomes. We CAN do more with less. Whether we have the political gumption to get there is the multi-trillion dollar question.
Social Security. The co-chairs don't raise the retirement age to 68 until 2050, and to 69 until 2075 (a blow for today's newborns, but tough choices have to be made...). So we have a bold, 40- to 65-year plan to bring benefit eligibility ages in line with reality, when life spans are already 14 years higher than when the retirement age of 65 was set decades ago. Come to think of it, in 2075 people will probably be living to at least 100. A task for a future commission! Meanwhile, the co-chairs don't even phase in "progressive indexing" of benefits until 2050, when a more thrifty shift to "price indexing" much sooner would be justified (this is a longer, seemingly arcane, yet essential discussion for a future column on intergenerational equity).
Gas tax. On my reading, the co-chairs call for a bold new 15-cent a gallon gas tax. Ross Perot called for 50 cents twenty years ago. Our problems grow, our ambitions shrink.
Good news! The co-chairs do put tax expenditures (or subsidies) for things like employer provided health care and mortgages on the table for cuts. That's genuinely terrific and worthy of applause.
I know that within the conventional boundaries of debate, what Bowles and Simpon have offered is a step forward. But when the conventional boundaries of debate are utterly inadequate to our actual challenges, someone has to say so.