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Simpson-Bowles 2.0

by Stephen Lendman Tuesday, Apr. 30, 2013 at 9:04 PM

class war

Simpson-Bowles 2.0

by Stephen Lendman

Both men represent the nation's ruling class. They want more wealth transferred from ordinary people to corporate America and privileged elites like themselves. They're back with plan B. More on that below.

On February 18, 2010, Obama issued Executive Order 13531. It established the National Commission on Fiscal Responsibility and Reform (NCFRR).

Two neoliberal ideologues head it: former Senator Alan Simpson (R. WY) and former Clinton White House chief of staff Erskine Bowles.

They head a 19-member team. It's stacked with like-minded members. Their mandate then and now includes fiscal austerity for most people, unlimited wealth opportunities for corporate America and super-rich elites.

Plan A includes:

• ending or capping middle class tax breaks; home mortgage interest deductions and tax-free employer provided healthcare insurance are targeted;

• taxing capital gains and dividends the same as ordinary income;

• lowering income tax rates to 9, 15 and 24%; currently they range from 10 - 39.6%;

• slashing corporate tax rates from the top 35% rate to 26%; eliminating some deductions was proposed;

• making the research and development tax credit permanent;

• making deep Medicare cuts; increasing Medicaid co-pays; eliminating billion from graduate medical education; and enacting "comprehensive tort reform;" doing so makes it harder for aggrieved patients to file malpractice suits;

• raising the Social Security retirement age to 69 by 2075; reducing cost-of-living increases; they're now based on annual inflation rates; raising the payroll tax ceiling to 0,000; high-income earners benefit most;

• eliminating 10% of federal workers by 2015; doing so increases unemployment when reducing it should be prioritized;

• raising the federal gasoline tax by 15 cents a gallon; imposing "user fees" on motorists; at issue is having ordinary people fund the federal transportation and highway spending program; and

• cutting 0 billion in military spending; targeted are administration inefficiencies, weapons Pentagon officials don't want, overseas force contingent drawdowns, and medical benefits for military retirees through less care and/or higher premiums and co-pays;

By 2020, NCFRR proposed cutting about .8 trillion. Doing so harms ordinary Americans at a time helping them should be prioritized.

Austerity is official policy. Republicans and Democrats agree. Major cuts are planned. They're coming. Obama demands them.

Simpson and Bowles (SB) are back. On April 18, the Washington Post headlined "New Bowles-Simpson plan takes aim at deficit," saying:

They're "back in Washington with a new message for the nation's policymakers: You've done the easy stuff. You've done the stupid stuff. Now it's time to get serious."

They briefed lawmakers on their latest plan. It proposes "far less in new taxes" and much greater Medicare cuts. It urges replacing across-the-board sequester reductions by hitting ordinary people hardest.

It eliminates the legal cap on government borrowing. It recommends letting the Treasury "keep borrowing as long as the debt does not grow as a percentage of the nation's economy."

It argues for .5 trillion more in taxes. It also wants cuts over and above what's already agreed on. According to Bowles:

"I think this is our last chance. I don't think there's any chance after the end of the fiscal year because we'll be back into politics again."

"We've done the easy stuff. We put a cap on discretionary spending, and we raised taxes on rich people. What else are we going to do."

Fact check

Medicare and Social Security are fiscally sound. Minor adjustments only are needed to keep them that way.

Since 1979, America's top 1% tripled its share of national income. It went from 8% to about 24%. It keeps rising annually.

From 1993 - 2000, top earners got 45% of income growth. From 2000 - 2008, they got 65%. In 2010, it was 93%. Corporations also benefitted hugely.

From 1998 - 2007, corporate profits rose 10% a year on average. In 2009 and 2010, they increased 243%. Excluded are sheltered amounts offshore.

In 2012, corporate profits were 12.4% of GDP. It was the highest level since WW II. At the same time, worker compensation hit a 57-year low.

Increased sales didn't produce profits. Cost-cutting did on the backs of workforces. Jobs, wages, benefits, and hours worked suffered. Productivity rose. Companies are producing more goods and services at less cost.

In 2011, profit margins reached their highest level in over 80 years. Federal, state, and local government tax cuts benefitted bottom line performance. In 2012, profit margins increased further. They grew by 7.6% compared to 4.6% the previous year.

High income households benefitted proportionately. They did so through equity appreciation, dividends, interest, rents, and other wealth increasing methods.

In contrast, ordinary people lost out hugely. Increasingly they're hard-pressed to get by. Force-fed austerity promises worse.

Cutting Medicare harms seniors when they most need help. Claiming it's going broke don't wash. Healthcare overall is unaffordable.

Further cuts make it more so when most needed. Illnesses will go untreated. Pain, suffering and early deaths will follow. Bipartisan contempt for ordinary people assures it. Simpson-Bowles 2.0 ups the stakes further.

It proposes another .4 trillion in savings over 10 years. Around .7 trillion was enacted. It includes about 0 billion in new revenue.

It recommends a Social Security COLA based on chain-weighted CPI. It's a scam. It's the latest gimmick to destroy benefits.

It assumes when prices on some products rise, consumers choose lower-cost substitutes. Perhaps so for steak v. hamburger.

It doesn't hold for rents, other housing costs, transportation, gasoline, electricity and other energy costs, as well as medical expenses. They're highest late in life.

Simpson-Bowles (SB) proposes a new 0 Medicare Parts A and B annual deductible. They also want 80% coverage for Part A instead of the current 100%.

Doing so requires another 0 - 0 private insurance cost. Part B works that way now. If seniors want current benefits, they'll have to pay more. Otherwise they lose out.

At issue is rationing healthcare. It's already unaffordable. Ahead it'll be more so. Cutting Social Security benefits compounds the problem.

SB also wants Medicare eligibility raised to age 67. At issue is leaving low-income 65 and 66-year-old seniors uninsured. It also proposed other non-defense discretionary (NDD) cuts. Doing so hits disadvantaged households hardest.

It targets Title I education for low-income students, Head Start, Pell Grants, low-income housing assistance, help for the homeless, and WIC nutrition programs.

On April 28, Simpson and Bowles wrote a Washington Post op-ed titled "A grand bargain is still possible. Here's how," saying:

"To be sure, some progress has been made the past two years. Policymakers have enacted about .7 trillion in deficit reduction…."

"Yet what we have achieved so far is insufficient. Nothing has been done to make our entitlement programs sustainable for future generations, make our tax code more globally competitive and pro-growth, or put our debt on a downward path."

It bears repeating. Medicare and Social Security are fiscally sound. They're not entitlements. They're contractual federal obligations. They're for eligible recipients who qualify. They're insurance programs. Payroll taxes fund them.

Obama's new budget reflects the worst of neoliberal harshness. It's economically destructive. It's another wealth transfer scheme. It hits ordinary households hardest.

Simpson and Bowles said it doesn't go far enough. "That's why we released a new plan" to go further, they said. It's not "ideal," they admitted. It's not the only plan.

"It is an effort to show that a deal is possible in which neither side compromises its principles but instead relies on principled compromise."

"Such a deal would invigorate our economy, demonstrate to the public that Washington can solve problems and leave a better future for our grandchildren."

Simpson and Bowles reflect the worst of political Washington. They do so when around 23% of Americans are unemployed. Poverty, homelessness and hunger approach record levels.

They propose increasing the greatest wealth disparity in US. The gap between rich and poor is unprecedented.

They want America's social contract destroyed. Force-fed austerity assures it. The criminal class in Washington is bipartisan. Simpson and Bowles are members in good standing. They're point men for the worst of what's coming. Better times are distant memories.

Stephen Lendman lives in Chicago. He can be reached at

His new book is titled "Banker Occupation: Waging Financial War on Humanity."

Visit his blog site at

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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