Bowles-Simpson Redux

The Campaign to Fix the Debt has forged a coalition of business leaders, budget experts and policymakers to raise awareness and create solutions to our nation’s fiscal challenges. As part of this effort, NYSE Euronext CEO Duncan Niederauer has joined as a member of the Campaign’s Fiscal Leadership Council. Two prominent figures in the Campaign are former White House Chief of Staff Erskine Bowles (a Democrat) and former Wyoming Senator Alan Simpson (a Republican).

In an attempt to spur action in Washington, Bowles and Simpson recently unveiled a new, bipartisan plan to reduce the deficit by an additional $2.4 trillion over 10 years. This compares to President Obama’s suggested cuts of $1.5 trillion and the House GOP goal of $4 trillion.

According to the new Simpson-Bowles plan, one quarter of the $2.4 trillion in cuts “should come from health care reforms and another quarter from tax reform.” The remaining cuts “should come from a combination of mandatory spending cuts, stronger discretionary caps…and lower interest payments.”

Their plan lays out four steps – the first two of which are already underway – to reduce the deficit over the next decade:

1)      Reduce defense and non-defense discretionary spending by $1.85 trillion

2)      Increase revenue collection and enact minor additional spending cuts to save $850 billion

3)      Enact serious tax and entitlement reforms and cut additional spending by $2.4 billion

4)      Make social security and highway funding solvent and Medicare sustainable