Transcript: Simpson-Bowles announce new blueprint to reduce deficit by $2.4 trillion

Transcript of excerpts from the Politico Playbook Breakfast with Alan Simpson and Erskine Bowles, co-chairs of the National Commission on Fiscal Responsibility and Reform, on sequestration and deficit reduction. The event was held on Feb. 19, 2013 and moderated by Mike Allen, Politico’s White House correspondent.

Mike Allen:
…This morning, the two of you put out a blueprint for how to get something done. This is a practical document. Simpson-Bowles back in 2010 was sort of what you would like to have done. This is what you think could be done, picking up where the Speaker, the President left off. And there were two pieces of news in it. One is that this is getting a lot more expensive – will cost about $5 trillion to do so…

[interruption from audience member]

Erskine Bowles:
We believe if you look at the plan we’re putting forward, you know, we call for reforming the tax code – broadening the base, simplifying the code in a very progressive manner, raising additional revenue to reduce the deficit. And if you look at where the tax expenditures are paid, they’re generally paid by people in the upper income brackets, and so in a progressive manner it will increase the revenues…

[interruption from audience member]

The second point I would make is if you look at what we’re doing with Social Security, we actually raise the minimum payment to 125% of poverty. We give people between 81 and 86 a 1% per year annual bump up because that’s when most private retirement plans run out. So we’ve tried to be sensitive to this.

The second principle in our plan is we don’t want to do anything that hurts the truly disadvantaged. So there have been no cuts in SSI or food stamps or unemployment compensation. As I said, we do raise the minimum payment on Social Security.

Mike Allen:
Now, in this plan, you make it clear that neither side is doing enough. The approaches so far have been Band-Aids. What do you think – this is designed to be something that can actually be enacted – what needs to happen to create a runway to actually get a deal? You know how to work the levers of Washington – how do you create an environment where something big could happen?

Erskine Bowles:
You know, for us – what we felt at the end of last year was a disappointment like no other that I’ve ever experienced. We really felt like that was the magic moment. It was a time where we had the best chance to really do something serious about long-term fiscal reform and responsibility. And we felt it was a real lost opportunity. And as we have looked back on it, it’s become clearer and clearer to us that if in fact we’re actually going to get a bipartisan deal that we’re going to have to push both sides to get out of their comfort zone and to make the kind of compromises that we need to make to get something done.

Mike Allen:
Let’s talk about those two side. And we’ll start with what you’re asking Democrats to do. In your new plan, you say that there needs to be $600 billion in deficit reduction from health savings. The last best offer from the White House was $400 billion. You’re saying they need to do quite a bit more.

Erskine Bowles:
They do need to do quite a bit more if we’re going to slow the rate of growth of health care on a per capita basis something close to the rate of growth of the economy. So yes, we do.

Mike Allen:
How do you convince them – they will argue that they have been aggressive. How do you convince them that that will not get the job done?

Erskine Bowles:
We have to convince the Democrats that they have to do more on health care than they’ve been willing to do today and we have to convince the Republicans that they have to be willing to do more on revenue than they’ve already done.

Mike Allen:
Specifically, in the plan out today, you say that there needs to be more revenue from tax reforms whereas Republicans have been talking about having that be revenue-neutral. You say that won’t get the job done.

Erskine Bowles:
No, it won’t get the job done. If we don’t do something on the revenue side, then it just puts too much pressure on the rest of the operating – operations of the country and we have to make cuts that are too big in either the income support programs or we have to make big cuts in those areas that we need to invest in in order to be competitive in what is today a knowledge-based global economy. That would be things like education, infrastructure, and research. So yes, we’re recommending that of the $2.4 trillion in step 1 of what we’re recommending, we recommend that a quarter come from revenue, a quarter come from health care cuts, and the remainder come from cuts in other mandatory spending, discretionary spending, interests on the debt, and going to the chained-CPI.

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