Mr. Bowles had harsh words for fellow Democrats. He dismissed the idea that raising taxes alone might help erase the deficit, saying “raising taxes doesn’t do a dern (sic) thing” to address health care costs that are projected to be a big driver of future fiscal problems. – Bowles Predicts Support for Deficit Deal
Jonathan Chait has a good piece up on this subject. One main item stands out among several good points he makes.
The one step that actually would reduce the deficit substantially and in the correct time frame is letting the Bush tax cuts expire. I can’t think of a good fiscal rationale for Bowles to dismiss that, though the political logic of doing so is clear enough.
Chait goes on to demolish Bowles’s health care cost argument, which is to set a federal cap on health care costs, something that’s completely nonsensical.
The Affordable Care Act has a wide-ranging series of reforms to transform the incentive structure of insurers, hospitals and physicians, so as to control the long-term rise in costs. Bowles-Simpson just says, we’re only going to pay so much and no more, without doing anything to ensure that the cost of the care actually stays within those bounds.
Yglesias has more.
Both Democrats and Republicans, but especially those on the debt commission led by Bowles and Simpson, are making economic decisions based on politics, particularly 2012 presidential politics.
We’ve got an entire political class cheered on by traditional media yakkers who continue to pontificate about cutting entitlements and discretionary spending while ignoring the need to tap obvious revenue availability in the millionaire and billionaire brackets, but also including corporate tax areas where loopholes abound to let corporations hide their assets and pay squat in taxes.
Democrats, led by Barack Obama, showed callous disregard for fiscal sense when they caved to extend the Bush tax cuts.
Erskine Bowles is pissed off at people on the Left who insist on raising taxes for mil-billionaires, while he sits on his flabby derriere supporting the Bush tax cuts and declaring frivolous federal caps on health care that won’t hold. I’ll allow that the man is supposed to know finance, but it doesn’t take a genius to figure out what he’s pushing is for presidential election purposes and courting independents. It hardly matters who’s in the White House if Pres. Obama is going to endorse Republican economic boondoggles like extending the Bush tax cuts, which don’t solve our problems.