The Simpson-Bowles Report

August 1, 2012 § Leave a comment

I spent the last few days reading the Simpson-Bowles Report.  It is online; sixty plus pages; well written, but tightly packed with numbers, facts, tables and graphs.  My brain didn’t last through the report in one sitting.  I had to put it down, wait a day and then finish it with the definite feeling that I would have to re-read some of it if I wanted to understand it.

If you haven’t read it, here is a link:  Report.

I like the way the report is written.  It uses language like “going broke”.  I learned several things I didn’t know. For example, I didn’t know there were 44 different federal job training programs in several different agencies.  I didn’t know there was a federal program that paid money to states for cleaning up abandoned coal mines, and continues to pay those states after all their coal mines are cleaned up.  I didn’t know that a rich guy could “retire” early, receive Social Security payments for several years while continuing to earn money, and then repay the money he received, “retire” again, receive the increased Social Security benefits resulting from his decision to “retire” late, but pay zero interest on the benefits he received after he retired the first time.  Of course, with present interest rates  as low as they are, the benefit is not so great but still, nothing is as good as free.

These are just examples of the federal goodies Simpson-Bowles recommends that we discontinue.  They propose we continue to deduct interest on our home mortgage, but not on a  second “vacation” home mortgage.

They have a proposal to try out Paul Ryan’s idea of substituting a voucher for Medicare by applying that system to all federal employees for some “trial period”.  At the end of the trial period, analysis would be made to see what effect it had on the quality of health care available to the employees and the effect it had on the cost of that health care.   The Report doesn’t state whether “federal employees” would include members of Congress and their staffs, but surely they would want to participate (not!).  I predict this idea will only happen if the government-haters manage to achieve a safe (veto proof) majority in Congress and, if that happens, the guinea pigs will not include members of Congress or their staffs.

I don’t want to make light of this Report.  It is serious stuff.  I think the designers do not intend to balance the budget “on the backs of workers or the poor”.   They propose banning all earmarks and closing all tax loopholes except for the above mentioned mortgage deduction and the child credit deduction.   They propose making major changes in the  way the defense budget is handled to eliminate it as a trough for doling out money to political constituencies all over the country.  One of Simpson’s lines is “Bringing home the bacon won’t work any more.  The pig is dead.”

I also don’t read the report as a prescription for “austerity in midst of a recession”.   It is filled with “phased in over time” language and postponing all spending reductions until 2013.  Remember, the Report was drafted in 2010.   If the recession is still a problem in 2013, their proposals can be postponed again, but they make a point of arguing that each year of postponement adds to the size of the problem.

I am aware of Paul Krugman’s quarrel with these guys and I have watched a video interview of Simpson mouthing back at Krugman about his comments.   Here is a link to that video:  Video  .  The interview occurred about a year ago during a conference concerning the federal debt issues.   The interviewer worked for Bloomberg.

I assume these are the issues we will be hearing about for the next year or so.  They are serious matters and it seems to have fallen our luck to have some world-class jackasses in charge of dealing with them.  In Texas, our Lieutenant Governor and choice of Governor Oops was judged not quite crazy enough to suit my fellow Texans, so they are dispatching Ted Cruz, the choice of Dick Armey and Jim Demented to take care of things for us.  How would you like to be Barack Obama, told that you should negotiate a rational economic policy with these Yahoos?

I was scrolling through some Tweets last night, reading reactions to the “Tea Party sweep”.  One guy wrote:  “This is a ‘Thelma and Louise’ moment.”  Think we’re headed for the cliff?


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