What you need to know about the new Simpson-Bowles plan

1. The plan put forth by Erskine Bowles and Alan Simpson, co-chairs of the Moment of Truth project, and called "A Bipartisan Path Forward to Securing America's Future," can be downloaded at http://momentoftruthproject.org/publications.

2. The new plan intends to save $2.4 trillion - which would replace and double the savings of the sequester - beyond the $2.7 trillion in deficit reduction that's already been enacted. So that's $5.1 trillion in total deficit reduction.

3. The new plan includes about $600 billion in revenue through tax reform, which would mean total new revenue would be about $1.2 trillion after including the fiscal cliff deal. So-called "chained-CPI," which increases revenue as well as cutting Social Security benefits, would push that to about $1.3 trillion. That's around what President Barack Obama proposed in his final offer during the fiscal cliff negotiations, but it's less than half the new revenue contained in the original Simpson-Bowles plan. So Simpson and Bowles have revised the tax ask way, way down.

4. A more detailed comparison isn't yet possible. What we have so far is an outline, not a plan. We don't know the size of the discretionary cuts. We don't know the size of the mandatory cuts. We don't know any of the policies save for chained-CPI. All of that's forthcoming. "Right now, all they've released is a framework," says Marc Goldwein, policy director at the Center for a Responsible Federal Budget. "They want to spend a couple of weeks getting comments and input."

5. The exact numbers haven't been released yet, but total discretionary spending cuts will be lower than in the original Simpson-Bowles plan, Goldwein tells me.

6. This isn't meant to be an update to Simpson-Bowles 1.0. Rather, it's meant to be an outline for a new grand bargain. To that end, Simpson and Bowles began with Obama and House Speaker John Boehner's final offers from the fiscal cliff deal. That helps explain why their tax ask has fallen so far: Obama's final tax ask was far lower than what was in the original Simpson-Bowles plan, while Boehner's tilt towards spending cuts was far greater than what was in the original Simpson-Bowles.

7. That said, while this plan doesn't include more tax increases than Obama asked for, it does include significantly more than the $1 trillion in spending cuts than Boehner asked for - about $500 to $700 billion more, if I'm reading it right. In increasing the total deficit reduction, Simpson and Bowles have put the weight on the spending side of the budget.

8. In that way, this plan sacrifices the most useful element of the original Simpson-Bowles effort, which was that it created a model - not the only model, of course - for how you might go about reducing the deficit if you weren't bound by the various promises, interest groups and political constraints of the two parties. This plan, by contrast, is an effort to split the difference between the two parties while amping up the total deficit reduction.

What you need to know about the new Simpson-Bowles plan 02/19/13 [Last modified: Tuesday, February 19, 2013 3:15pm]

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