Today, the National Commission on Fiscal Responsibility and Reform Co-Chairs Erskine Bowles and Alan Simpson released their proposal for addressing what they call a “crushing debt burden” caused by skyrocketing spending over the past few years. The plan ignores every suggestion submitted by ATR President Grover Norquist to the Commission that would have balanced the budget without raising taxes. In fact, the Commission Co-Chairs refuse to acknowledge the role overspending has played in the economic climate, setting spending at the exorbitant FY2010 levels. Amongst other things, the plan:
- Spends too much. Government spending has typically been set at 21 percent of GDP, with revenues averaging 18 percent. The plan spends above this level every year until 2040, keeping taxes at around 20 percent to fund this profligacy
- Does nothing to address long-term spending restraint. Instead, the Co-Chairs propose raising taxes to unprecedented levels to sustain excessive government growth.
- Refuses to acknowledge the impact big government, excessive spending packages such as the “stimulus” plan and bailout bills have had on the country’s solvency. Instead, the plan sets spending at FY2010 levels, starting in FY 2012. This instantiates the “stimulus,” bailout and big government efforts of the past two years for generations to come, costing taxpayers $317 billion more than if outlays were rolled back to FY08 levels.
- Takes the misguided approach of looking at debt as a percentage of GDP rather than spending. In reality, the plan spends over ten trillion dollars in the next ten years, or $2.9 trillion more than if spending were frozen at FY08 levels.
- Requires a one percent spending cut based on the spending levels of the previous year from 2012 until 2015, but bases these cuts off of the starting point of the bloated FY10 levels and only requires spending reductions until 2015, the benchmark for the President’s goal of deficit reduction.
- Serially overstates cost savings based on unreliable and disproven data. For instance, the plan relies on the Pentagon’s estimate of $5.4 billion in savings resulting from contracting costs. This projection, however, does not taking into account the massive costs associated with moving that work from outside contracts to inside the DOD, the average cost of which is $4 million per new federal employee.
- Demonstrating a total apathy for serious fiscal reform, the plan allows Congress and President to waive what spending constraints it does suggest in years there is “low economic growth, unanticipated military conflict or major disaster,” without bothering to define any of these criteria, making little—if anything—in the proposal binding.