A Bitter Pill - Simpson and Bowles Unveil Deficit Reduction Plan

Click on the post title for my source material - a New York Times article.

Former Senator Alan K. Simpson and Erskine B. Bowles, who was President Clinton's White House Chief of Staff, sent a shot across the bow of Washington policy makers November 10 when they revealed an austere deficit reduction plan composed of deep spending cuts and significant tax increases.

The proposal has something guaranteed to offend every side of the political spectrum:

1. Sharp tax increases, including a 15-cent a gallon federal gasoline tax increase, the elimination of the mortgage interest deduction, tax credits targeting low income wage earners and federal tax deductions for state and local tax payments.
2. Across the board cuts in federal spending, including military spending, Medicare and Social Security.

The proposal projects a roughly $4 trillion reduction in the federal deficit by 2020. It recommends a 2-1 ratio of spending cuts to revenue increases.

This plan deserves serious study and consideration. One of my greatest concerns is whether it, or any ultimate plan, weighs more heavily on the lower economic sectors and more lightly on the wealthiest sectors.

The bleak truth is that meaningful deficit reduction will be painful, unpopular and extremely difficult to implement. Unless it is evenly spread across the economic landscape, it will be disastrous.