BLOGGER Vs. BLOGGER: Debating the Latest Bowles-Simpson Plan

Last week, Erskine Bowles and former Sen. Alan Simpson (R-Wyo.) released a $2.4 trillion deficit-reduction proposal in an attempt to bridge the gap between Obama and the GOP and show that a budget deal to avoid the sequester still is achievable.

The plan calls for $600 billion in Medicare and Medicaid savings by decreasing provider payments, raising premiums for higher-income beneficiaries, reducing prescription drug costs and making “adjustments to account for an aging population.”

In the U.S. News & World Report‘s “Debate Club,” Dean Baker — co-director of the Center for Economic and Policy Research — writes that the proposed Medicare and Social Security cuts will be a major hit to millions of seniors who have a median income of $20,000 a year. He notes that in their 2010 deficit plan, Bowles and Simpson had called for $300 billion in cuts to Medicare spending over the decade. Since then, the Congressional Budget Office has already cut its Medicare spending projections by over $500 billion, meaning that “we already have seen more savings from Medicare than they originally targeted.”

In a counter-post, Garrett Jones — an associate professor of economics at George Mason University — writes that he supports the Bowles-Simpson plan because it is “far wiser, than the real alternative: A few more years of the status quo, a few more years of piling up massive debt, a few more years of letting taxpayers and the near-elderly believe that maybe we don’t need any big changes in government policy.” He adds that individuals’ investment in retirement benefits “has paid off,” adding, “Even if Medicare spending grows more slowly than in the past, the average person on Medicare will receive far better health services than her ancestors did back in the ’60s or ’70s.”

OUR TAKE: Simpson and Bowles acknowledge that their proposal contains “more health care than Democrats would like and more revenue than Republicans support,” but they believe it is the minimum necessary to “put the debt on a clear downward path.” However, a closer look at the plan reveals that it is far heavier on spending cuts than raising revenue from taxes; in fact, the proposal calls for more cuts than those mandated by the sequester. The White House has estimated that the 2% reduction to Medicare under the sequester would amount to about $11.085 billion, which is significantly less than the $600 billion in savings included in the Bowles-Simpson plan.

— by Heather Drost, staff writer