Simpson-Bowles Commission

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Learn more about Pete Peterson-funded astroturf projects at the Fix the Debt Portal.

The National Commission on Fiscal Responsibility and Reform (often called Bowles-Simpson/Simpson-Bowles Commission after the co-chairs Alan Simpson and Erskine Bowles) is a Presidential Commission created in 2010 by President Barack Obama to identify "…policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run." The Commission first met on April 27, 2010.[1][2]

In November of 2010, the Commission's two chairmen released a draft report that was met with a barrage of criticism. The plan contained painful austerity measures that critics contended would further weaken the economic recovery. It called for cuts in benefits for the elderly, veterans, and many government employees. Most importantly, it would have cut the Social Security “cost of living” or COLA increase. Reduced COLA would amount to a benefit cut of close to 3 percent for a typical retired worker. Since the median income for households of people over age 65 is just $31,000, this would be a big hit to a segment of the population that is already struggling. [3]

The Economic Policy Institute estimated that had the Bowles-Simpson plan been implemented starting in 2012, it would have reduced employment by 1.4 million jobs in 2013 and 1.9 million jobs in 2014. Over the first three years, employment would fall by 4 million jobs under Bowles-Simpson.[4] The EPI also estimated that the Bowles-Simpson plan would have reduced economic growth by 4 percent over the first three years.[4]

The "Moment of Truth" document that is often referred to as the Commission's "final report" (The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform) is better described as a report of the co-chairs, Erskine Bowles and Alan Simpson. The Commission failed achieve a 14-member, super-majority vote to approve a final report and trigger a vote in Congress on the package. [5]

On March 28, 2012, Representatives Jim Cooper (D-TN) and Steve LaTourette (R-OH) put forward a bill modeled on the plan which, according to analyst Ezra Klein, had "somewhat less in tax increases." The House rejected the proposal 382 to 38. 22 Democrats and 16 Republicans supported the bill.[6] [7]

Ties to Pete Peterson and "Fix the Debt"

This article is part of the Center for Media and Democracy's investigation of Pete Peterson's Campaign to "Fix the Debt." Please visit our main SourceWatch page on Fix the Debt.

About Fix the Debt
The Campaign to Fix the Debt is the latest incarnation of a decades-long effort by former Nixon man turned Wall Street billionaire Pete Peterson to slash earned benefit programs such as Social Security and Medicare under the guise of fixing the nation's "debt problem." Through a special report and new interactive wiki resource, the Center for Media and Democracy -- in partnership with the Nation magazine -- exposes the funding, the leaders, the partner groups, and the phony state "chapters" of this astroturf supergroup. Learn more at PetersonPyramid.org and in the Nation magazine.


At the launch of the Simpson-Bowles Commission it was announced that the Commission would be "partnering with outside groups," such as the Peter G. Peterson Foundation's America Speaks initiative.[8] [9]

The Washington Post's Dan Eggen, in a Nov. 10, 2010 story titled "Many deficit commission staffers paid by outside groups," revealed that two members of the Commission worked for Peterson-funded organizations. One of them was Ed Lorezen, who currently serves as the Senior Policy Advisor to the CEO of the Peter G. Peterson Foundation, and formerly served as the Concord Coalition's policy director from 2005-2007.[10] [11] The other was Marc Goldwein, whose salary was paid for by the Peterson-funded Committee for a Responsible Federal Budget. He is a Senior Policy Analyst at the New America Foundation, an organization that also took part of the aforementioned Peterson-Pew Commission, whose conclusions about how to cut the deficit strongly mirrored those of the Commission.[12][13]

"Peterson launched a massive effort to prop up the Simpson-Bowles Commission and its $4 trillion austerity package, a plan that would “destroy Social Security by stealth,” according to Strengthen Social Security. He bankrolled nineteen “America Speaks” town hall meetings to inform the commission’s deliberations, launched the “Owe No” TV ad campaign weeks before recommendations were released and bankrolled the Concord Coalition’s “Fiscal Solutions” tour to take the message to the heartland. When the commission blew up, Peterson gave Alan Simpson and Erskine Bowles a new perch at the Center for a Responsible Federal Budget."[14]

Controversy

Reaction to the Plan

Robert Kuttner

In a Nov. 11, 2010 appearance on Democracy Now!, Journalist Robert Kuttner had this to say about the Commission: "We’re in a prolonged recession that bears more resemblance really to a depression. And you cannot get out of a depression by austerity. The idea that you should have an arbitrary set of cuts in the deficit at a time when you need more public spending is totally perverse. It’s the economics of Herbert Hoover. It’s the politics of the Republican right. And it’s one more indication of the capture of the Obama administration by Wall Street. I mean, Erskine B. Bowles gets over $300,000 a year [15] for attending a few meetings of Morgan Stanley, the investment bank, on whose board he sits, so he gets more money in board fees than 99 percent of Americans earn. And you’ve got three privately funded commissions by the Peterson Foundation, Pete Peterson, proposing the same stuff. It’s intended to create a drumbeat to carry out a wish list that has long been the goal of fiscal conservatives, that has nothing to do with this crisis."

President Obama

President Obama implicitly called for cutting Social Security and phasing in an increase in the normal retirement age to 69 when he endorsed the deficit reduction plan.[16] He also mentioned the report positively in his 2013 State of the Union address.[17] Economist Dean Baker explains the impact on Social Security: "The reduction in benefits is the result of their proposal to reduce the size of the annual cost of living adjustment by 0.3 percentage points by using a different price index. After 10 years this would imply a reduction in benefits of 3 percent, after 20 years the reduction would be 6 percent, and after 30 years the reduction would be 9 percent. If the average beneficiary lives long enough to collect benefits for 20 years, the average reduction in benefits would be approximately 3 percent."[18]

James K. Galbraith

In his statement to the Commission, prominent economist James K. Galbraith was very critical:[19]

Your proceedings are clouded by illegitimacy. In this respect, there are four major issues...

Galbraith went on to identify the problems: the secrecy of the proceedings, the temperament of the leadership, the lack of economic expertise on the commission, and conflicts of interest.

Conflicts of interest constitute the fourth major problem. The fact that the Commission has accepted support from Peter G. Peterson, a man who has for decades conducted a relentless campaign to cut Social Security and Medicare, raises the most serious questions. Quite apart from the merits of Mr. Peterson’s arguments, this act must be condemned. A Commission serving public purpose cannot accept funds or other help from a private party with a strong interest in the outcome of that Commission’s work. Your having done so is a disgrace."

Paul Krugman

New York Times economic columnist Paul Krugman is one of the commission's most prominent critics; "Simpson-Bowles is terrible. It mucks around with taxes, but is obsessed with lowering marginal rates despite a complete absence of evidence that this is important. It offers nothing on Medicare that isn’t already in the Affordable Care Act. And it raises the Social Security retirement age because life expectancy has risen — completely ignoring the fact that life expectancy has only gone up for the well-off and well-educated, while stagnating or even declining among the people who need the program most."[20]

Robert Reich

Robert Reich, former U.S. Secretary of Labor under the Clinton Administration, was also critical: "[T]he report mentions but doesn’t emphasize the biggest driver of future deficits – the relentless rise in health-care costs coupled with the pending corrosion of 77 million boomer bodies. This is 70 percent of the problem, but it gets about 3 percent of the space in the draft. The report suffers a more fundamental error — the unquestioned assumption that America’s biggest economic challenge is to reduce the federal budget deficit. The size of the budget deficit (and cumulative debt) is meaningless without reference to the size of the economy. What looks like a big debt 10 or 20 years from now may turn out to be small if growth has been rapid in the intervening years. By the same token, a seemingly small future debt can become unmanageable if the economy tanks, or barely grows at all."[21]

Richard Trumka

Speaking about the report's deficit-cutting proposals, Richard L. Trumka, President of the AFL-CIO said: "With this report the Deficit Commission once again tells working Americans to 'Drop Dead.' No proposal on fiscal issues is serious that leaves the Bush tax cuts for the rich in place while raising taxes on the middle class and slashing Social Security and Medicare."[22]

Obama Destroying Social Security & Medicare?

Cuts to Vital Services for Working Families

The Bowles-Simpson plan would impose $1.7 trillion in spending cuts to discretionary programs over the next decade.[23]

The Bowles-Simpson plan does not clarify which specific services would be cut. Rather, it establishes an overall spending limit that applies to all discretionary programs—ranging from education, public health, infrastructure and environmental protections. An indiscriminate cap on discretionary spending ignores the current crisis in many service areas.

For example, one of the programs that would be subject to the annual squeeze on spending would be Early Head Start. Early Head Start exists to address the comprehensive needs of low-income children under age 3 and pregnant women. Because of current funding shortfalls, less than four percent of eligible children receive Early Head Start services.[24]

Similarly, the Child Care and Development Block Grant helps low-income parents pay for child care so that they can work or go to school. Under current funding levels allow only one in six eligible children receive child care assistance.[25] In recent years states have made deep cuts to child care programs. Nearly half of states either turn away new applicants or place eligible children on waiting lists. Only one state meets the federal-recommended standard for payment rates for child care providers.[26]

Mental Health Services would also be impacted by spending limits in Bowles-Simpson that force new cuts every year. States and communities have significantly reduced funding for mental health and addiction services. In four years (state fiscal years 2009 to 2013) states cut $4.35 billion in mental health services, while an additional 700,000 people sought help at public mental health programs during this period.[27]

Revenue Increases Give the Wealthy a Pass

The Bowles-Simpson plan would have reduced the deficit by nearly $4 trillion over ten years. Only 25 percent of the deficit reduction would have come from new revenues.[23]

Commission Members

Co-Chairpersons:

Executive Director:

  • Bruce Reed, former Chief Domestic Policy Adviser to President Clinton

Commissioners:

Articles and Resources

Featured SourceWatch Articles on Fix the Debt

References

  1. Executive Order -- National Commission on Fiscal Responsibility and Reform, Feb. 18, 2010. WhiteHouse.gov
  2. About the National Commission on Fiscal Responsibility and Reform
  3. Dean Baker, Erskine Bowles: An Object Lesson, The Guardian, September 10, 2012, Accessed January 7, 2013
  4. 4.0 4.1 Josh Bivens and Andrew Fieldhouse, Fiscal commissioners' proposal would cost millions of jobs, Economic Policy Institute, November 16, 2010.
  5. In a 11-7 Tally, the Fiscal Commission Falls Short on Votes The New York Times, December 3, 2010.
  6. Ezra Klein, Wonkbook: House reaches bipartisan deal to reject Simpson-Bowles The Washington Post - WonkBlog, March 29, 2012.
  7. Andrew Taylor, Simpson-Bowles Plan Rejected By House, The Huffington Post, March 28, 2012.
  8. Lori Montgomery, Presidential commission to address rising national debt, Washington Post, April 27, 2010.
  9. Mark Schmitt, Philanthropy is My Co-Pilot, The American Prospect, April 29, 2010.
  10. Ed Lorenzen, Many deficit commission staffers paid by outside groups, The Washington Post, November 10, 2010.
  11. Ed Lorenzen, LittleSis.org, Accessed January 8, 2013.
  12. Marc Goldwein, CRFB.org, Accessed January 8, 2013.
  13. Marc Goldwein, New America Foundation, NewAmericaFoundation.net, Accessed January 8, 2013.
  14. Lisa Graves, [pete peterson article], The Nation, February 21, 2013.
  15. Director Compensation, MorganStanley.com, Accessed January 8, 2013.
  16. David Rogers, Obama endorses deficit commission plan, Politico, January 23, 2010.
  17. New York Times, 2013 State of the Union Address, February 12, 2013.
  18. President Obama Calls for Cutting Social Security by 3 Percent, Raising Normal Retirement Age in Acceptance Speech, Center for Economic and Policy Research, September 7, 2012.
  19. Campaign for America's Future, James K. Galbraith Statement to the Commission On Deficit Reduction, text of testimony, June 30, 2010.
  20. Paul Krugman, A Public Service Reminder: Simpson-Bowles Is Terrible, The New York Times, September 30, 2012.
  21. Robert Reich, Why We Should Beware Budget-Deficit Mania, personal website, November 11, 2010.
  22. Deficit Panel Releases Proposals to Cut Spending Ahead of Vote, DemocracyNow.org, December 2, 2013.
  23. 23.0 23.1 National Commission on Fiscal Responsibility and Reform, The Moment of Truth, commission report, December 2010.
  24. Center for Law and Social Policy (CLASP), Supporting Our Youngest Children: Early Head Start Programs in 2010, March, 2012.
  25. U.S. Government Accountability Office, Child care: Multiple factors could have contributed to the recent decline in the number of children whose families receive subsidies, 2010.
  26. The National Women’s Law Center, Downward Slide: State Child Care Assistance Policies 2012, October 11, 2012.
  27. The National Association of State Mental Health Program Directors (NASMHPD), Too Significant To Fail: The Importance of State Behavioral Health Agencies in the Daily Lives of Americans with Mental Illness, for Their Families, and for Their Communities. 2012, 2012.
  28. Commission Members, Accessed January 4, 2013