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As Fiscal Cliff Nears, Simpson-Bowles Re-Emerges


This is WEEKEND EDITION, from NPR News. I'm Rachel Martin. Simpson, Bowles - the names flew by eight times, without explanation, during Wednesday's presidential debate. Google reported that Simpson-Bowles was among the most searched-for terms online that night. The reference was to Republican elder statesman Alan Simpson and his Democratic counterpart, Erskine Bowles. The two headed a 2010 commission on the national debt.

The commission's proposals never went to Congress for a vote. But now, the nation is facing the threat of the so-called fiscal cliff next year, when automatic spending cuts and tax hikes go into effect. So Washington policymakers are taking another look at Simpson-Bowles. And the two gentlemen are making the rounds on Capitol Hill, trying again to gin up support for their plan.

Senator Simpson and Mr. Bowles join me now, to talk about what they're hearing from lawmakers - and from President Obama and Mitt Romney. Welcome to the program.

ALAN SIMPSON: Thank you.

ERSKINE BOWLES: Thank you so much.

MARTIN: So both candidates now talking about embracing parts of this plan. I'd like to hear from both of you - first, Mr. Bowles - which candidate's deficit- reduction proposal comes closer to what you have both recommended.

BOWLES: Well, you know, I think it's fair to say that neither plan, you know, embraces the total of what we have recommended. We recommend $1 of revenue, and $3 of spending cuts, to get a $4 trillion deficit-reduction package. Of the two plans, the only one that is a balanced plan is the one presented by President Obama.

I will say that, you know, while he has revenue in his plan, the way he achieves that revenue is not what either Al or I, or anyone on our commission, felt was the best way to do it; the best way to make American globally competitive. Gov. Romney, on the other hand, doesn't have any revenue in his proposal. He actually increases spending on defense by about $2 trillion.

MARTIN: Sen. Simpson, do you agree with Mr. Bowles' assessment that President Obama's plan is the more balanced of the two, or more likely - come closer to the Simpson-Bowles plan?

SIMPSON: I don't know because they don't ever get specific - neither one of them. Erskine and I did a 67-page report, and told exactly what we would do to go in and dig in, and get to the balance. We named names - of programs in defense that would come out; we talked exactly what we would do with government and freezing and attrition, and talked specifically what we do in Medicaid and Medicare and Social Security - in-depth - to make it solvent for 75 years. So I don't give either one of them a pass because neither one of them could stand there and specifically say what they were going to do. We have; we did. And they never will.

MARTIN: You've been talking about, as part of your plan, closing these loopholes - this is a phrase we're hearing a lot about. Can you talk specifically about how you would do that? Which loopholes would you close?

SIMPSON: Well, it's very specific in our report. You need to look at them; there were 180 of them - plus. They're all just delicious and nutritious, and everybody loves them. You'd go into home mortgage-interest deduction, which will create abdominal pain in the real estate industry and the homeowners, who'd say this is the end of homeownership in America. And we say wait a minute.

BOWLES: Few people realize that we have $1.1 trillion worth of these - what you call loopholes. They are called tax expenditures but really, all they are is spending in the tax code; they are tax earmarks. What we said - to start with - is, hey, let's wipe them all out; and let's use 92 percent of the money to reduce income tax rates. If you want to add back some of these - some of the spending in the tax code; if you want to add back the earned-income tax credit or the child tax credit, or the mortgage-interest deduction or the charitable deduction, fine. But if you do, you have to raise income tax rates because somebody has to pay for it.

MARTIN: And the Republicans haven't been willing to do that.

BOWLES: What the Republicans haven't been willing to do, is two things. One, they haven't been willing to identify any of the tax expenditures that they would get rid of; and two, they haven't been willing to use any of the money from getting rid of these tax expenditures, to reduce the deficit. They want to use 100 percent of the money to reduce income tax rates.

SIMPSON: The Dems haven't exactly been sweet on this, either, you know. I mean - to just sit there and say, you know, we're not going to touch anything with regard to the entitlements because of poor, old seniors.

BOWLES: Absolutely. That's true.

SIMPSON: And so, you know, it's a beautiful gridlock. They each can go back to their base. And one of them can say to their chosen group - on the left, you know: I'm losing sleep. I've lost 20 pounds. I'm in that room every day, trying to get a handle on this horrible, $16 trillion debt. And then they brought up doing something with precious Medicare, and I walked out. And I knew that you would be thrilled.

And then the righties can go back to their base and say: I tell you, I haven't eaten or slept for two months. And I went in there, and I was doing beautifully, hacking away; and then somebody mentioned the tax increase. And I had a vision of Grover Norquist through the mist, and I knew you'd want me to do that.

MARTIN: I mean, the picture that you've painted is pretty grim - with people backed up into their corners. What makes you think that this time around, anything will change?

BOWLES: Because I think people are finally beginning to realize that if we don't act, and we don't do this ourselves, then the markets will do it for us.

SIMPSON: And don't forget: They built their own prison - and put the shackles on their own ankles - last August, when they put together this package, which all blows up with a sequester - which is a word nobody understands. But it means just taking an ax to defense and non-defense - $600 billion out of each. And you either deal with it before the end of the year, or kick the can down the road - which now is a 55-gallon drum.

MARTIN: So you two are out and about, talking with members of Congress, making your case. There has always been a certain group who have intimated that they would be supportive of Simpson-Bowles, but are you getting any new faces? Have you been able to convince people to support this, who didn't before?

BOWLES: Yeah, we've had a lot of luck. We've taken our plan, and we now have it in legislative language. And we've been socializing that around the Senate and the House. So we're making progress. We don't have 218 in the House; and we don't have 60 in the Senate. But we're making a lot of progress.

MARTIN: Former Clinton White House Chief of Staff Erskine Bowles, and former Republican Sen. Alan Simpson. They headed the 2010 National Commission on Fiscal Responsibility and Reform. Thanks to you both.

SIMPSON: Thank you so much.

BOWLES: Thank you very much. Transcript provided by NPR, Copyright NPR.

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