A committee set up by President Obama in 2010 was instructed to find a bipartisan solution to America's fiscal crisis. It's failure will have serious repercussions for the economy, say its architects.
The architects of the rejected plan to reduce America's national debt have called the country's fiscal crisis “crazy” and described the financial challenges facing the US as a “cancer”.
Speaking prior to the second Presidential Debate between President Obama and Governor Mitt Romney at Hofstra University in Long Island, New York, Erskine Bowles and Alan Simpson described their proposal as “common sense solutions to this country's problems.”
Bowles, former Chief of Staff to President Bill Clinton, and Simpson, a former Republican Senator, were co-chairs of the National Commission on Fiscal Responsibility and Reform.
The committee, created by President Obama in February, 2010, was instructed to find a bipartisan solution to the fiscal crisis.
PAUL RYAN 'HELPED SCUPPER THE PLAN'
In December last year, the commission took a vote on its own proposal to be presented to Congress but found itself in the bizarre situation of voting down its own plan.
While Simpson and Bowles voted for the plan, committee member Paul Ryan, now Mitt Romney's candidate for Vice President, was among seven dissenting votes that scuppered the plan that has now returned as an election talking point.
“If we can't get the people in Washington, in the administration and Congress on both sides of the aisle, to put aside this partisan politics then we face the most predictable economic crisis in history and also the most avoidable economic crisis in history,” said Bowles.
“There is no question that the fiscal path the country is on is unsustainable. This is a cancer that will destroy this country from within.”
Bowles outlined what he and Simpson considered the five biggest fiscal challenges the United States faces:
“We spend twice as much on healthcare as any other developed nation in the world,” Bowles said. “That might be alright if our outcomes were twice as good but they are not. We are somewhere between 25th and 50th in outcome measures in infant mortality, life expectancy, preventable death. Healthcare is the biggest problem we face. What are these guys going to do about it?
“We spend more on national defence than the next 17 largest countries – combined,” Bowles said. “That includes both Russia and China. I don't think that America can afford to be the world's policeman. When Admiral Mullen was asked what the biggest national security danger was he didn't say 'terrorists'. He said deficit. America has a treaty with Taiwan that will protect Taiwan if it is invaded by the Chinese. There's just one problem with that. We have to borrow money from China to do it.”
“We have the most inefficient, ineffective, globally anti-competitive tax code any man could dream of,” said Bowles. “The one we have today simply doesn't make sense. How can our nominal rates be so relatively high but get us so little money? We only get 1.3 trillion in total income taxes. The reason is we have $1.1 billion in back door spending in the tax code – deductions and credits. We recommend that we broaden the base and simplify the code and wipe out all of this .”
“Over the next decade Social Security is $900 billion cash negative,” Bowles said. “If we don't do something about it Social Security will go broke in 2031. When Roosevelt created Social Security, average life expectancy was 63. You got Social Security at 65. He was a really smart guy! Now life expectancy is 78 and you get Social Security at 62. We have a math problem.”
INTEREST ON THE DEBT
“We spend about $230billion a year on interest now,” said Bowles. “That's more than we spend on Education, Energy, Interior, Justice, Homeland Security and State combined. And do nothing? Kick the can down the road? Think about that.”
Both Bowles and Simpson, advocates of political bipartisanship, were critical of how their plan failed to be introduced to Congress.
Simpson, an almost 20-year veteran of the U.S. Senate, used a carefully crafted description to explain his experience in government.
“I want to tell you about this word 'politics',” he said. “It comes from the Greek. 'Poli' meaning 'many' and 'Tics' meaning 'Blood sucking insects'.
“I'm a Republican and Ernest is a Democrat,” he added. “But we are Americans first. Not a Republican first. Not a Democrat first. Americans first.”