Subject: The Simpson-Bowles Breakthrough: Why We Need Obam
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "David and Joan Schwerin" <[email-masked]>
Date: Fri, 12 Nov 2010 12:28:49 -0500

From Andrew Sullivan.....

The Simpson-Bowles Breakthrough: Why We Need Obama
12 NOV 2010 11:30 AM

A reader writes:

As a long-time reader who staffs one of the 18 commissioners (and who therefore has been in the room for many of the private meetings), I would say that right now, 17 of the 18 commissioners are still sitting at the table trying to work constructively -- even after seeing the frightening choices in the co-chairs' first marker.  (A certain left-wing congresswoman made it clear months ago that she had no interest in a solution.) 

Liberals are focused on their dislike of the 75/25 split between spending cuts and tax increases, but this is deceptive. 

It really breaks down like this: 25% taxes, 25% entitlement savings, 25% defense discretionary, and 25% non-defense discretionary.  Fully half comes from taxes and defense.  The problem, however, is that in the long run, half of the claimed deficit reduction is discretionary spending (both defense and non-defense).  This is a budget gimmick.  Discretionary spending is determined on an annual basis by regular appropriations bills; Bowles and Simpson are merely assuming that future Congresses will hold to their proposed line, despite an annual opportunity to revisit. 

Past precedent is not promising: discretionary spending caps can hold for a few years (perhaps helping the commission achieve its 2015 goal), but after that the pressures cause Congress to abandon those caps.  Simply asserting that discretionary spending will grow more slowly than GDP for decades is not a credible "plan".  That means that only half the long-term deficit reduction is real, and this half is split evenly between tax increases and entitlement reductions - which is a much less attractive ratio to conservatives (although at least the taxes come from broadening the base rather than raising rates).

Having said this, all but one commissioner is still willing to work on this as a starting point (which is all Bowles and Simpson intended).  And from a political perspective, that is promising in and of itself. 

Given the long-term fiscal calamity we face, I would never advise anyone to get up and walk away.  But there's still a gulf that has to be spanned - not just on ideology but on the very perception of what this proposal is actually doing.  And that gulf cannot be spanned if President Obama doesn't take ownership at some point and actually lead these commissioners to a deal.  They won't sign on the dotted line without him.  The commissioners need to keep tweaking the details among themselves, but at the end of the day nothing gets done without presidential leadership.  He can stay silent for a few more weeks, but at some point it might be his bluff that gets called.

Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
[email-masked]
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