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Thursday, June 21, 2012 - 10:34

Broad Interest Continues For Simpson-Bowles US Deficit Plan


--Architect of Deficit Plan Takes Fiscal Message To Commencement Talk
--Informal Hill Talks Use Simpson-Bowles Plan As Starting Point

WASHINGTON (MNI) - University commencement addresses have been used over the ages to offer platitudinous advice and to level stern professional challenges.

Secretary of State George Marshall went to Harvard in June 1947 to present the outlines of a sweeping European recovery plan that bears his name.

President George W. Bush traveled to West Point in June 2002 to unveil his preventive war strategy that provided the basis for the American invasion of Iraq in 2003.

No doubt less dramatically but still quite tellingly, former White House chief of staff Erskine Bowles was invited to deliver the commencement address to American University's class of 2012 last month: he devoted his entire talk to fiscal issues, specifically the nation's massive budget deficits.

That such a topic could be the centerpiece of a commencement address helps underscore the new centrality of fiscal issues in American life.

Bowles warned in his remarks the United States is facing "the most predictable economic crisis in history and also the most avoidable."

The string of annual deficits of more than $1 trillion and projections of massive deficits well into the future should be seen as a matter of grave concern for policymakers -- and all U.S. citizens, he said.

"They are like a cancer and over time will destroy our country from within," he declared.

Bowles told the audience the nation's fiscal crisis is driven by four interrelated problems: the soaring cost of health care, massive annual expenditures on defense programs, a cumbersome and inefficient tax code, and the large -- and certain to grow -- yearly expenditures to service the nation's debt.

"We've got to get serious about this," he said, referring to the nation's fiscal challenges. "We're running out of money. We've got to start thinking."

Bowles touted the deficit reduction plan that he drafted with former Sen. Alan Simpson that achieves more than $4 trillion in deficit reduction over a decade, with a blend of spending cuts and tax increases.

"This is the minimum that we must do to stabilize our debt," Bowles said.

Senate Budget Committee Chairman Kent Conrad told MNI this week that the Simpson-Bowles plan is one of the starting points in informal congressional talks on deficit reduction. A similar package drafted by former Senate Budget Committee Chair Pete Domenici and former White House budget director Alice Rivlin also is being used in the talks.

"Both of these packages use the same framework," Conrad said, adding that "it's the framework that makes the most sense."

The Simpson-Bowles plan would reduce spending to about 22% of GDP by 2022 and bring revenues up to about 21% of GDP in 2022.

It also calls for a sweeping overhaul of the American tax code.

During his commencement address at AU, Bowles called the U.S. tax code "crazy" and "nuts." This remark drew a healthy round of applause.

** MNI Washington Bureau: (202) 371-2121 **

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