MEMO: President Obama’s Deficit Plan Builds on the Simpson-Bowles Recommendations

MEMORANDUM TO INTERESTED PARTIES

FROM:           James Kvaal, Policy Director

SUBJECT:    President Obama’s Deficit Plan Builds on the Simpson-Bowles Recommendations

Over the weekend, Governor Mitt Romney appeared on CBS’s Face the Nation to hold up the Simpson-Bowles budget commission proposal as a possible model for his administration, if he is elected.  In the past, he has said, “I think very highly of their recommendations,” and praised the commission for cutting spending while creating pro-growth tax policies. And he campaigned with Reps. John Boehner and Paul Ryan, who have criticized President Obama for not enacting Simpson-Bowles despite opposing it themselves. 

But in reality, Governor Romney’s budget plans reject Simpson-Bowles. While Simpson-Bowles devotes over $2 trillion in revenue increases towards deficit reduction, Mitt Romney refuses to raise even a dollar in revenue as part of a balanced deficit-reduction plan.  In fact, he would cut taxes by an additional $5 trillion, with the largest benefits for the wealthiest and no plan to pay for it. Despite his praise for the Simpson-Bowles approach, Romney’s plans are fundamentally incompatible with it.

President Obama has published a detailed plan to bring down the deficit by more than $4 trillion over the next decade. The plan, including detailed cost estimates, can be found at the Office of Management and Budget web site, www.omb.gov.  Under the Obama plan:

Same Framework: The Obama budget embraces the fundamental philosophy of Simpson-Bowles: a balanced approach that finds specific spending cuts and savings across the budget, asks the wealthiest Americans to pay their fair share, includes a contribution from revenues, and protects both key investments in our future and programs for vulnerable Americans.

More Savings in Annual Domestic Spending: It includes more savings from annual domestic spending than was recommended by Simpson-Bowles. These saving have already been enacted and will reduce annual domestic spending to its lowest level in 50 years as a share of the economy.

Similar Savings in Other Domestic Spending: The Obama plan achieves savings comparable to those Simpson-Bowles proposes through reforms in Medicare, Medicaid, and so-called “other mandatory” programs including agriculture subsidies, federal worker retirement, and the postal service. Commission co-chairs Alan Simpson and Erskine Bowles have acknowledged it incorporates some of the proposals in their report.

It is true that President Obama did not endorse the recommendations of Simpson-Bowles in their entirety. The president disagrees with the depth of the commission’s recommended cuts to defense and Social Security.  Simpson-Bowles also raises about $600 billion more in revenue over the next decade than President Obama’s plan, including net tax increases on the middle class. The independent Congressional Budget Office agrees that the president’s plan will stabilize the debt as a share of our economy.

But President Obama’s plan reflects the same balanced approach that avoids asking only one group of Americans to shoulder the burden of deficit reduction and protects investments in our future. Commission co-chair Erskine Bowles has written that “the president does support the general framework of the ‘Simpson-Bowles Plan,’ and he is willing to do his part to put our fiscal house in order.” 

In contrast, Governor Romney’s budget proposals are fundamentally incompatible with the Simpson-Bowles plan:

Unbalanced: Governor Romney repeated again Sunday that he would reject a budget deal that includes $10 in spending cuts for every $1 in revenue increases, opposing efforts to make millionaires and corporations contribute their fair share. Indeed, Mitt Romney would keep tax preferences like the carried interest loophole for Wall Street investors and subsidies for oil companies, and provide even deeper tax cuts to wealthy taxpayers like himself.

Doesn’t Add Up: Governor Romney has proposed a $5 trillion tax plan that – since he refuses to describe a single tax preference he would reform or loophole he would close to help pay for it – would increase the deficit by trillions of dollars.

Higher Spending: Governor Romney has proposed a defense build-up that independent analysts say could cost $2 trillion over 10 years, though it lacks a clear national security strategy behind it.

Shortchanges Key Investments: Governor Romney supports the cuts to domestic programs from the House Republican budget, which would be far deeper than Simpson-Bowles, jeopardizing both investments in our future and protections for the most vulnerable.

Relies on Secret Cuts and Tax Increases: Governor Romney has failed to propose specific figures for the vast majority of his proposals, telling reporters that his tax plan “can’t be scored” and telling donors that he keeps his plans secret during the election campaign because he worries that they would be politically unpopular. The editor of the conservative National Review, Rich Lowry, appeared after Romney on the same episode of “Face the Nation” and criticized the candidate for his “great allergy to specifics and details.”

President Obama has proposed a specific plan that takes a balanced approach to reduce the deficit and stabilize the national debt similar to that advocated by Simpson-Bowles.  The bottom line is simple: President Obama has a plan that would reduce the deficit by more than $4 trillion, while Governor Romney’s plans would increase it by as much as $5 trillion.