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Plan

Simpson-Bowles's Bipartisan Path Forward to Securing America's Future, February 2013

Former co-chairs of the President's bipartisan National Commission on Fiscal Responsibility and Reform Erskine Bowles and Alan Simpson proposed a new deficit reduction plan on February 19, 2013, through their organization Moment of Truth. Their plan projects reductions by $2.4 trillion over the next decade, with cuts to Medicare, Medicaid, Social Security, and discretionary spending, and ending or curbing deductions and tax breaks.

Excerpt from the plan:

Four Steps to Deficit Reduction (2014-2023)

Step 1: Reduce Defense and Non-Defense Discretionary Spending (~$1.85 trillion)

• Enact immediate reductions in discretionary spending levels (Oct 2010-Apr 2011)
• Impose ten-year caps to reduce and limit the growth of discretionary spending (Aug 2011)

Step 2: Increase Revenue Collection and Enact Minor Additional Spending Cuts (~$850 billion)

• Allow the upper-income tax cuts to expire, generally for income above $450,000 (Jan 2013)
• Make minor reductions in discretionary caps and Medicare provider payments (Jan 2013)

Step 3: Enact Serious Tax and Entitlement Reforms and Cut Additional Spending (~$2.4 trillion)

• Reduce Medicare and Medicaid spending by improving provider and beneficiary incentives throughout the health care system, reducing provider payments, reforming cost-sharing, increasing premiums for higher earners, adjusting benefits to account for population aging, reducing drug costs, and getting better value for our health care dollars (Feb-Dec 2013)
• Enact comprehensive, pro-growth tax reform that eliminates or scales back most tax expenditures, with a portion of savings from tax expenditures dedicated to deficit reduction and the additional savings used to reduce rates and simplify the tax code (Feb-Dec 2013)
• Strengthen limits on discretionary spending (Feb-Dec 2013)
• Reduce non-health mandatory spending by reforming farm subsidies, modernizing civilian and military health and retirement programs, imposing various user fees, reforming higher education spending, and making other changes (Feb-Dec 2013)
• Adopt chained CPI for indexing and achieve savings from program integrity (Feb-Dec 2013)

Step 4: Make Social Security and Highway Funding Solvent and Medicare Sustainable

• Require reforms on a separate track to make Social Security sustainably solvent (2013)
• Require a highway bill to bring transportation spending and revenues in line (2014)

• Require additional reforms of federal health care programs if necessary to limit the growth of the per beneficiary federal health commitment to close to GDP growth (2018)