In the lead-up to the November election, excited talk of Simpson-Bowles
is bubbling up amongst the vacuous
classes. Created in 2010 by President Barack Obama, the National
Commission on Fiscal Responsibility and Reform ("Simpson-Bowles")
was tasked with reducing the federal deficit by identifying "policies to
improve the fiscal situation in the medium term and to achieve fiscal
sustainability over the long run." The House and Senate were
allotted six members each, to be divided evenly between Republicans and
Democrats. To no one's surprise, House and Senate Republicans appointed a
slate of fire-breathing, right-wing fiscal conservatives who detest so-called
"entitlements" like Social Security, including Vice Presidential
Ryan. House Democrats, at that time led by Speaker Nancy Pelosi,
picked three moderate-to-liberal Democrats, while Harry Reid's Senate appointed
three moderate-to-conservative Democrats. And the President? He
appointed to his commission two Republicans, including the former Senator Alan
Simpson, as well as five fiscally conservative Democrats. Among them was
one Erskine Bowles, who incidentally sat on the board of Morgan Stanley while
co-chairing the commission with Alan Simpson.
The commission was set up to provide a framework for a
"Grand Bargain" sought by the gentleman presently seated in the White
House. Along with health care reform, it would be the crowning jewel of
his presidential legacy, a glittering beacon of bipartisan consensus that would
put the country back on track to fiscal stability after a decade of Republican
recklessness. Enthusiasm for the commission's proposal fizzled out,
however, for lack of support on both sides of the aisle: hardcore
conservatives like our good friend Congressman Ryan felt that the plan did not
go far enough toward
creating a tax-free utopia for wealthy
individuals and corporations, while those more liberally inclined dubbed
Simpson-Bowles the "Catfood Commission," owing to the fact that the
proposed benefit cuts would force many of the nation's elderly into such
extreme poverty that they would barely be able to afford to eat cat food.
At the time, Paul Krugman marveled at the tax section of the Simpson-Bowles proposal. The alleged goals of the reforms were listed in seven bullet points: lower tax rates were the very top priority, with “Reduce the Deficit” coming in dead last. Mr. Krugman wondered, reasonably enough, why exactly a “deficit-cutting commission” would prioritize cutting tax rates above all else and relegate deficit reduction to the very bottom of their list. Given its conservative makeup, however, it was pretty obvious that this "deficit cutting commission" was never intended to be a “commission” intended to “cut” the “deficit,” at least as those words are commonly understood by speakers of the English language. In all likelihood, "Reduce the Deficit" is the seventh of seven bullet points because someone remembered to slap it onto the list at the last minute in order to gloss over the actual point of the entire exercise — no doubt enjoying a hearty chuckle as they did so.
To be sure, the Simpson-Bowles plan embodied a few excellent ideas, such as reducing defense procurement by 15%, closing a third of overseas military bases, and eliminating earmarks. (Of course funding for all of that would be reinstated immediately under the next Republican Congress and administration.) But when one gets right down to it and crunches the numbers, the Simpson-Bowles commission had put forth a plan that would do little or nothing to reduce the deficit. Instead, it would transfer wealth upward from a reeling middle class to America’s Owners: the already absurdly wealthy elite.
For example, the commission claimed it looked at all potential sources of revenue, yet strangely enough, it left the entire financial sector alone (paging Erskine Bowles... Hello Erskin Bowles? Yes you, over there in the boardroom at Morgan Stanley...?). And the Simpson-Bowles plan would in fact increase revenue by $100 billion, but it would do so mainly by increasing taxes and eliminating deductions that disproportionately affect the middle class and working poor: introducing a 15 cent per gallon gasoline tax, eliminating the home mortgage interest deduction and the deduction for certain healthcare costs, reducing student loan subsidies, cutting the federal work force by 10%, and slashing government pensions (including military pensions). Worst of all, the commission took a particularly cruel stab at Social Security: it proposed raising the retirement age to 70.
Social Security has not and in fact cannot contribute one dime to the deficit, but that didn't stop the commission from attacking it. It's not exactly a secret that conservatives have long desired the transfer of Social Security's vast holdings to their Wall Street benefactors, presumably to manage the funds at least as well as they managed to implode the economy in 2008. Privatization proved to be politically impossible during the Bush administration even under a Republican Congress, but that didn't stop conservatives from attempting to undermine the program at every opportunity. Social Security is, after all, a Big Government program that actually works as intended: it keeps senior citizens out of poverty (barely, but still). Here are a few salient facts about the program:
The Social Security trust fund currently holds more than $2.6 trillion in bonds.
In 2010, Social Security ran a surplus of nearly $69 billion, receiving $781 billion in revenues (according to the 2011 Social Security Trustees’ report).
It is currently projected that, if no changes are made to the system at all, the fund will be exhausted in 2036. Does that seem like an urgent problem? I mean, I could be wrong but according to my ladymath, 2036 is, like, 24 years from now.
There's more: even if the fund is "exhausted" in 2036 — and again, this is provided no changes whatsoever are made to the system before then — Social Security will still have enough of an income stream from payroll taxes to pay about 75 percent of current benefits.
The payroll cap for Social Security is presently $110,100. That is, Social Security taxes are taken out only as a percentage of the first $110,100 of a person's income. No matter how much income you make over the cap amount, you never pay any more into Social Security.
Increasing the amount of the payroll cap would instantly prevent this terrifying and urgent catastrophe looming over all our heads (in 2036). Raising the cap is an obvious and easily-implemented fix — so obvious, in fact, that the Simpson-Bowles commission had no choice but to propose a modest increase. But let's be clear: raising the retirement age to 70 is a benefit cut: it would cost beneficiaries an average of $35,419 over the course of their retirement (EPI analysis of Social Security Administration, 2009 data). Further, raising the retirement age is supposedly justified by an increase in the lifespan of the American worker. But life expectancy has increased only for the relatively well-off — precisely those who need to rely on Social Security the least:
Men at the top of earnings have experienced a life expectancy increase of 5 years since 1982 while low-income men have seen a life expectancy increase of 1.1 years. For low-income women, life expectancy has in fact decreased.
Often, the monthly Social Security check is the only source of income for elderly women.
Of course, removing
the payroll cap entirely and subjecting to the Social Security tax other
forms of income (such as capital gains, or whatever it is that Mitt Romney
squeaks by on these days) would provide an astonishing level of retirement
security for generations of Americans. Unfortunately, America's Owners
and their political servants in Washington will never allow such a thing,
because OMG FREEDOM!!!
You see, I learned something many years ago — the hard way, like I do pretty much everything else, unfortunately. And that is when what someone says is in direct contradiction to what someone does, their words are lies and their actions tend to speak the truth. In this case, a bipartisan “deficit reduction commission” put forth a plan which will do little to reduce the deficit, and instead will erode the safety net and increase taxes on the middle class and the working poor, all in order to pay for more tax breaks for wealthy corporations and individuals. On the Simpson-Bowles commission sat some of the most powerful people in Washington, and since when have the most powerful people in Washington ever done anything but entrench their own power, privilege, and wealth? None of these people – not one – cares one whit about the federal deficit. Well, okay: except insofar as it must never, ever burden their benefactors. If they seriously wanted to tackle the deficit, they would all be chanting “Single Payer Healthcare!” in unison, and anyone paying the least bit of attention knows it. No, the most reasonable conclusion to draw here, the one that makes the fewest assumptions, explains all of the facts in evidence, and clarifies the (deliberately created) confusion, is that further tax breaks for rich individuals and wealthy corporations, paid for by the decimated middle class and working poor, is precisely what President Barack Obama's National Commission on Fiscal Responsibility and Reform was intended to accomplish. As his own appointments to the commission amply demonstrate, he is a True Believer™ in conservative economic policy. According to Bob Woodward, Barack Obama likes to say, “I’m a blue dog. I want fiscal restraint and order.”
Which means, ladies and gentlemen, that liberals have been focused on the wrong problem. It isn't the Tea Party Republicans, who will never, ever be reasoned out of conservative economic policies despite the long history of damage they inflict on 99% of the country's citizens. The problem is conservative Democrats, starting with the Fiscal-Conservative-in-Chief, Barack Obama.
With the resurgence of the Simpson-Bowles plan gaining traction in political circles and the very real possibility that it could be implemented (in a lame duck session or otherwise), it may well be that the only hope for the nation to escape this terrible fate is that Tea Party Republicans and Paul Ryan acolytes block it in the House, because Simpson-Bowles just isn't terrible enough for them.